x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
Large accelerated filer
x
|
|
Accelerated Filer
¨
|
|
|
Non-accelerated filer
¨
|
|
||
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Smaller reporting company
¨
|
|
Emerging growth company
¨
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Part I
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Part II
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101 Financial statements formatted in Extensible Business Reporting Language: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Changes in Equity, and (vi) the Notes to Consolidated Financial Statements.
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HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in thousands)
|
|
||||||
|
Nine Months Ended
September 30, |
||||||
|
2018
|
|
2017
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net income
|
$
|
84,857
|
|
|
$
|
61,600
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
22,647
|
|
|
22,738
|
|
||
Provision for loan losses
|
14,332
|
|
|
10,235
|
|
||
Net amortization of premium on securities
|
18,958
|
|
|
20,186
|
|
||
Securities gains, net
|
(1,037
|
)
|
|
(5,553
|
)
|
||
Unrealized gain on equity securities, net
|
(97
|
)
|
|
—
|
|
||
Stock based compensation
|
3,689
|
|
|
3,588
|
|
||
Loans originated for sale
|
(551,328
|
)
|
|
(548,768
|
)
|
||
Proceeds on sales of loans held for sale
|
594,529
|
|
|
586,202
|
|
||
Net gains on sale of loans held for sale
|
(13,939
|
)
|
|
(11,968
|
)
|
||
Increase in accrued interest receivable
|
(5,422
|
)
|
|
(1,449
|
)
|
||
Decrease in prepaid expenses
|
2,243
|
|
|
838
|
|
||
Decrease in accrued interest payable
|
1,121
|
|
|
1,104
|
|
||
Capitalization of servicing rights
|
(4,404
|
)
|
|
(5,993
|
)
|
||
Valuation allowance on servicing rights
|
(12
|
)
|
|
(29
|
)
|
||
Loss on sales/valuations of assets, net
|
2,243
|
|
|
1,642
|
|
||
Net excess tax benefit from stock based compensation
|
672
|
|
|
1,121
|
|
||
Other, net
|
(1,979
|
)
|
|
(5,637
|
)
|
||
NET CASH PROVIDED BY OPERATING ACTIVITIES
|
167,073
|
|
|
129,857
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Purchase of time deposits in other financial institutions
|
(1,000
|
)
|
|
—
|
|
||
Proceeds from the sale of securities available for sale
|
694,872
|
|
|
1,127,091
|
|
||
Proceeds from the redemption of time deposits in other financial institutions
|
8,767
|
|
|
12,171
|
|
||
Proceeds from the maturity of and principal paydowns on securities available for sale
|
172,702
|
|
|
161,827
|
|
||
Proceeds from the maturity of and principal paydowns on securities held to maturity
|
13,169
|
|
|
6,645
|
|
||
Proceeds from the maturity of and principal paydowns on time deposits in other financial institutions
|
5,829
|
|
|
24,931
|
|
||
Proceeds from the maturity of and principal paydowns on other investments
|
2,038
|
|
|
2,574
|
|
||
Purchase of securities available for sale
|
(940,607
|
)
|
|
(1,299,492
|
)
|
||
Purchase of other investments
|
(2,411
|
)
|
|
(1,012
|
)
|
||
Net (increase) decrease in loans
|
(13,737
|
)
|
|
45,139
|
|
||
Purchase of bank owned life insurance policies
|
(2,000
|
)
|
|
(2,000
|
)
|
||
Proceeds from sale of mortgage servicing rights
|
—
|
|
|
5,137
|
|
||
Capital expenditures
|
(11,793
|
)
|
|
(6,876
|
)
|
||
Net cash and cash equivalents received in acquisitions
|
212,197
|
|
|
71,089
|
|
||
Proceeds from the sale of equipment
|
998
|
|
|
1,845
|
|
||
Proceeds on sale of OREO and other repossessed assets
|
3,128
|
|
|
7,578
|
|
||
NET CASH PROVIDED BY INVESTING ACTIVITIES
|
$
|
142,152
|
|
|
$
|
156,647
|
|
|
|
|
|
|
Three Months Ended
September 30, |
||||||
(Dollars and number of shares in thousands, except per share data)
|
2018
|
|
2017
|
||||
Net income
|
$
|
33,710
|
|
|
$
|
21,632
|
|
Preferred dividends
|
(13
|
)
|
|
(13
|
)
|
||
Interest expense on convertible preferred debt
|
—
|
|
|
3
|
|
||
Net income available to common stockholders
|
$
|
33,697
|
|
|
$
|
21,622
|
|
Weighted average common shares outstanding for basic earnings per share
|
34,452
|
|
|
29,648
|
|
||
Assumed incremental common shares issued upon vesting of outstanding restricted stock units
|
192
|
|
|
262
|
|
||
Weighted average common shares for diluted earnings per share
|
34,644
|
|
|
29,910
|
|
||
Earnings per common share — basic
|
$
|
0.98
|
|
|
$
|
0.73
|
|
Earnings per common share — diluted
|
$
|
0.97
|
|
|
$
|
0.72
|
|
Number of antidilutive common stock equivalents excluded from diluted earnings per share computation
|
—
|
|
|
—
|
|
||
|
|
|
|
||||
|
Nine Months Ended
September 30, |
||||||
(Dollars and number of shares in thousands, except per share data)
|
2018
|
|
2017
|
||||
Net income
|
$
|
84,857
|
|
|
$
|
61,600
|
|
Preferred dividends
|
(39
|
)
|
|
(45
|
)
|
||
Interest expense on convertible preferred debt
|
—
|
|
|
12
|
|
||
Net income available to common stockholders
|
$
|
84,818
|
|
|
$
|
61,567
|
|
Weighted average common shares outstanding for basic earnings per share
|
32,520
|
|
|
27,569
|
|
||
Assumed incremental common shares issued upon vesting of outstanding restricted stock units
|
187
|
|
|
265
|
|
||
Weighted average common shares for diluted earnings per share
|
32,707
|
|
|
27,834
|
|
||
Earnings per common share — basic
|
$
|
2.61
|
|
|
$
|
2.23
|
|
Earnings per common share — diluted
|
$
|
2.59
|
|
|
$
|
2.21
|
|
Number of antidilutive common stock equivalents excluded from diluted earnings per share computation
|
—
|
|
|
—
|
|
|
2018
|
|
2017
|
||||||||||
|
Shares
|
|
Weighted-Average Grant Date
Fair Value
|
|
Shares
|
|
Weighted-Average Grant Date
Fair Value
|
||||||
Outstanding at January 1
|
301,578
|
|
|
$
|
34.74
|
|
|
346,817
|
|
|
$
|
27.61
|
|
Granted
|
116,297
|
|
|
55.26
|
|
|
109,071
|
|
|
47.21
|
|
||
Vested
|
(127,429
|
)
|
|
32.70
|
|
|
(136,428
|
)
|
|
26.66
|
|
||
Forfeited
|
(27,678
|
)
|
|
45.58
|
|
|
(12,923
|
)
|
|
31.57
|
|
||
Outstanding at September 30
|
262,768
|
|
|
$
|
43.65
|
|
|
306,537
|
|
|
$
|
34.72
|
|
|
2018
|
|
2017
|
||||||||||
|
Shares
|
|
Weighted-Average
Exercise Price
|
|
Shares
|
|
Weighted-Average
Exercise Price
|
||||||
Outstanding at January 1
|
6,500
|
|
|
$
|
18.60
|
|
|
26,400
|
|
|
$
|
18.60
|
|
Granted
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Exercised
|
(6,500
|
)
|
|
18.60
|
|
|
(13,650
|
)
|
|
18.60
|
|
||
Forfeited
|
—
|
|
|
—
|
|
|
(500
|
)
|
|
18.60
|
|
||
Outstanding at September 30
|
—
|
|
|
$
|
—
|
|
|
12,250
|
|
|
$
|
18.60
|
|
Options exercisable at September 30
|
—
|
|
|
$
|
—
|
|
|
12,250
|
|
|
$
|
18.60
|
|
|
As of May 18, 2018
|
||
Fair value of consideration paid:
|
|
||
Common stock (3,350,664 shares)
|
$
|
184,454
|
|
Cash
|
5,451
|
|
|
Total consideration paid
|
189,905
|
|
|
Fair value of assets acquired
|
|
||
Cash and cash equivalents
|
212,105
|
|
|
Securities:
|
|
||
Carried at fair value
|
1,788
|
|
|
Other securities
|
3,268
|
|
|
Loans held for sale
|
31,050
|
|
|
Loans held to maturity
|
681,080
|
|
|
Premises, furniture and equipment, net
|
23,271
|
|
|
Other real estate, net
|
379
|
|
|
Mortgage servicing rights
|
6,995
|
|
|
Core deposit intangibles and customer relationships, net
|
13,908
|
|
|
Cash surrender value on life insurance
|
14,997
|
|
|
Other assets
|
7,185
|
|
|
Total assets
|
996,026
|
|
|
Fair value of liabilities assumed
|
|
||
Deposits
|
893,827
|
|
|
Other borrowings
|
12,077
|
|
|
Other liabilities
|
21,580
|
|
|
Total liabilities assumed
|
927,484
|
|
|
Fair value of net assets acquired
|
68,542
|
|
|
Goodwill resulting from acquisition
|
$
|
121,363
|
|
(Dollars in thousands, except per share data), unaudited
|
For the Nine Months Ended
|
||||||
|
September 30, 2018
|
|
September 30, 2017
|
||||
Net interest income
|
$
|
317,846
|
|
|
$
|
262,367
|
|
Net income available to common stockholders
|
$
|
69,075
|
|
|
$
|
76,698
|
|
Basic earnings per share
|
$
|
2.02
|
|
|
$
|
2.48
|
|
Diluted earnings per share
|
$
|
2.01
|
|
|
$
|
2.46
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair
Value
|
||||||||
September 30, 2018
|
|
|
|
|
|
|
|
||||||||
U.S. government corporations and agencies
|
$
|
27,112
|
|
|
$
|
—
|
|
|
$
|
(115
|
)
|
|
$
|
26,997
|
|
Mortgage and asset-backed securities
|
1,926,803
|
|
|
1,341
|
|
|
(56,325
|
)
|
|
1,871,819
|
|
||||
Obligations of states and political subdivisions
|
372,146
|
|
|
239
|
|
|
(13,902
|
)
|
|
358,483
|
|
||||
Total debt securities
|
2,326,061
|
|
|
1,580
|
|
|
(70,342
|
)
|
|
2,257,299
|
|
||||
Equity securities with a readily determinable fair value
|
16,916
|
|
|
—
|
|
|
—
|
|
|
16,916
|
|
||||
Total
|
$
|
2,342,977
|
|
|
$
|
1,580
|
|
|
$
|
(70,342
|
)
|
|
$
|
2,274,215
|
|
December 31, 2017
|
|
|
|
|
|
|
|
||||||||
U.S. government corporations and agencies
|
$
|
5,358
|
|
|
$
|
8
|
|
|
$
|
(38
|
)
|
|
$
|
5,328
|
|
Mortgage and asset-backed securities
|
1,785,467
|
|
|
5,856
|
|
|
(37,587
|
)
|
|
1,753,736
|
|
||||
Obligations of states and political subdivisions
|
441,060
|
|
|
4,669
|
|
|
(4,714
|
)
|
|
441,015
|
|
||||
Total debt securities
|
2,231,885
|
|
|
10,533
|
|
|
(42,339
|
)
|
|
2,200,079
|
|
||||
Equity securities
|
16,296
|
|
|
378
|
|
|
—
|
|
|
16,674
|
|
||||
Total
|
$
|
2,248,181
|
|
|
$
|
10,911
|
|
|
$
|
(42,339
|
)
|
|
$
|
2,216,753
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair
Value
|
||||||||
September 30, 2018
|
|
|
|
|
|
|
|
||||||||
Obligations of states and political subdivisions
|
$
|
239,908
|
|
|
$
|
8,422
|
|
|
$
|
(936
|
)
|
|
$
|
247,394
|
|
Total
|
$
|
239,908
|
|
|
$
|
8,422
|
|
|
$
|
(936
|
)
|
|
$
|
247,394
|
|
December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Obligations of states and political subdivisions
|
$
|
253,550
|
|
|
$
|
12,460
|
|
|
$
|
(516
|
)
|
|
$
|
265,494
|
|
Total
|
$
|
253,550
|
|
|
$
|
12,460
|
|
|
$
|
(516
|
)
|
|
$
|
265,494
|
|
|
September 30, 2018
|
||||||
|
Amortized Cost
|
|
Estimated Fair Value
|
||||
Due in 1 year or less
|
$
|
23,216
|
|
|
$
|
23,161
|
|
Due in 1 to 5 years
|
50,520
|
|
|
49,592
|
|
||
Due in 5 to 10 years
|
131,431
|
|
|
125,824
|
|
||
Due after 10 years
|
194,091
|
|
|
186,903
|
|
||
Total debt securities
|
399,258
|
|
|
385,480
|
|
||
Mortgage and asset-backed securities
|
1,926,803
|
|
|
1,871,819
|
|
||
Equity securities with a readily determinable fair value
|
16,916
|
|
|
16,916
|
|
||
Total investment securities
|
$
|
2,342,977
|
|
|
$
|
2,274,215
|
|
|
September 30, 2018
|
||||||
|
Amortized Cost
|
|
Estimated Fair Value
|
||||
Due in 1 year or less
|
$
|
1,274
|
|
|
$
|
1,281
|
|
Due in 1 to 5 years
|
31,121
|
|
|
31,495
|
|
||
Due in 5 to 10 years
|
105,183
|
|
|
107,052
|
|
||
Due after 10 years
|
102,330
|
|
|
107,566
|
|
||
Total investment securities
|
$
|
239,908
|
|
|
$
|
247,394
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Proceeds from sales
|
$
|
59,137
|
|
|
$
|
503,083
|
|
|
$
|
694,872
|
|
|
$
|
1,127,091
|
|
Gross security gains
|
67
|
|
|
2,088
|
|
|
3,537
|
|
|
8,585
|
|
||||
Gross security losses
|
212
|
|
|
409
|
|
|
2,500
|
|
|
3,023
|
|
Debt securities available for sale
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
||||||||||||||||||
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
||||||||||||
September 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. government corporations and agencies
|
$
|
22,392
|
|
|
$
|
(39
|
)
|
|
$
|
4,605
|
|
|
$
|
(76
|
)
|
|
$
|
26,997
|
|
|
$
|
(115
|
)
|
Mortgage and asset-backed securities
|
1,007,078
|
|
|
(18,299
|
)
|
|
668,623
|
|
|
(38,026
|
)
|
|
1,675,701
|
|
|
(56,325
|
)
|
||||||
Obligations of states and political subdivisions
|
203,363
|
|
|
(5,552
|
)
|
|
139,394
|
|
|
(8,350
|
)
|
|
342,757
|
|
|
(13,902
|
)
|
||||||
Total temporarily impaired securities
|
$
|
1,232,833
|
|
|
$
|
(23,890
|
)
|
|
$
|
812,622
|
|
|
$
|
(46,452
|
)
|
|
$
|
2,045,455
|
|
|
$
|
(70,342
|
)
|
December 31, 2017
|
|||||||||||||||||||||||
U.S. government corporations and agencies
|
$
|
4,819
|
|
|
$
|
(38
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,819
|
|
|
$
|
(38
|
)
|
Mortgage and asset-backed securities
|
851,070
|
|
|
(11,533
|
)
|
|
399,978
|
|
|
(26,054
|
)
|
|
1,251,048
|
|
|
(37,587
|
)
|
||||||
Obligations of states and political subdivisions
|
93,040
|
|
|
(667
|
)
|
|
159,180
|
|
|
(4,047
|
)
|
|
252,220
|
|
|
(4,714
|
)
|
||||||
Total temporarily impaired securities
|
$
|
948,929
|
|
|
$
|
(12,238
|
)
|
|
$
|
559,158
|
|
|
$
|
(30,101
|
)
|
|
$
|
1,508,087
|
|
|
$
|
(42,339
|
)
|
Securities held to maturity
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
||||||||||||||||||
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
||||||||||||
September 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Obligations of states and political subdivisions
|
$
|
29,174
|
|
|
$
|
(209
|
)
|
|
$
|
13,160
|
|
|
$
|
(727
|
)
|
|
$
|
42,334
|
|
|
$
|
(936
|
)
|
Total temporarily impaired securities
|
$
|
29,174
|
|
|
$
|
(209
|
)
|
|
$
|
13,160
|
|
|
$
|
(727
|
)
|
|
$
|
42,334
|
|
|
$
|
(936
|
)
|
December 31, 2017
|
|||||||||||||||||||||||
Obligations of states and political subdivisions
|
$
|
8,512
|
|
|
$
|
(49
|
)
|
|
$
|
8,989
|
|
|
$
|
(467
|
)
|
|
$
|
17,501
|
|
|
$
|
(516
|
)
|
Total temporarily impaired securities
|
$
|
8,512
|
|
|
$
|
(49
|
)
|
|
$
|
8,989
|
|
|
$
|
(467
|
)
|
|
$
|
17,501
|
|
|
$
|
(516
|
)
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Loans receivable held to maturity:
|
|
|
|
||||
Commercial
|
$
|
1,962,222
|
|
|
$
|
1,646,606
|
|
Commercial real estate
|
3,648,731
|
|
|
3,163,269
|
|
||
Agricultural and agricultural real estate
|
574,048
|
|
|
511,588
|
|
||
Residential real estate
|
676,941
|
|
|
624,279
|
|
||
Consumer
|
506,181
|
|
|
447,484
|
|
||
Gross loans receivable held to maturity
|
7,368,123
|
|
|
6,393,226
|
|
||
Unearned discount
|
(1,340
|
)
|
|
(556
|
)
|
||
Deferred loan fees
|
(1,290
|
)
|
|
(1,206
|
)
|
||
Total net loans receivable held to maturity
|
7,365,493
|
|
|
6,391,464
|
|
||
Allowance for loan losses
|
(61,221
|
)
|
|
(55,686
|
)
|
||
Loans receivable, net
|
$
|
7,304,272
|
|
|
$
|
6,335,778
|
|
|
Allowance For
Loan Losses
|
|
Gross Loans Receivable
Held to Maturity
|
||||||||||||||||||||
|
Ending Balance
Under ASC
310-10-35
|
|
Ending Balance
Under ASC
450-20
|
|
Total
|
|
Ending Balance Evaluated for Impairment
Under ASC
310-10-35
|
|
Ending Balance Evaluated for Impairment
Under ASC
450-20
|
|
Total
|
||||||||||||
September 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial
|
$
|
4,165
|
|
|
$
|
17,904
|
|
|
$
|
22,069
|
|
|
$
|
23,414
|
|
|
$
|
1,938,808
|
|
|
$
|
1,962,222
|
|
Commercial real estate
|
214
|
|
|
23,476
|
|
|
23,690
|
|
|
14,415
|
|
|
3,634,316
|
|
|
3,648,731
|
|
||||||
Agricultural and agricultural real estate
|
260
|
|
|
4,306
|
|
|
4,566
|
|
|
17,522
|
|
|
556,526
|
|
|
574,048
|
|
||||||
Residential real estate
|
279
|
|
|
1,571
|
|
|
1,850
|
|
|
23,647
|
|
|
653,294
|
|
|
676,941
|
|
||||||
Consumer
|
1,085
|
|
|
7,961
|
|
|
9,046
|
|
|
8,671
|
|
|
497,510
|
|
|
506,181
|
|
||||||
Total
|
$
|
6,003
|
|
|
$
|
55,218
|
|
|
$
|
61,221
|
|
|
$
|
87,669
|
|
|
$
|
7,280,454
|
|
|
$
|
7,368,123
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial
|
$
|
1,613
|
|
|
$
|
16,485
|
|
|
$
|
18,098
|
|
|
$
|
7,415
|
|
|
$
|
1,639,191
|
|
|
$
|
1,646,606
|
|
Commercial real estate
|
766
|
|
|
21,184
|
|
|
21,950
|
|
|
23,705
|
|
|
3,139,564
|
|
|
3,163,269
|
|
||||||
Agricultural and agricultural real estate
|
546
|
|
|
3,712
|
|
|
4,258
|
|
|
13,304
|
|
|
498,284
|
|
|
511,588
|
|
||||||
Residential real estate
|
430
|
|
|
1,794
|
|
|
2,224
|
|
|
27,141
|
|
|
597,138
|
|
|
624,279
|
|
||||||
Consumer
|
1,400
|
|
|
7,756
|
|
|
9,156
|
|
|
6,903
|
|
|
440,581
|
|
|
447,484
|
|
||||||
Total
|
$
|
4,755
|
|
|
$
|
50,931
|
|
|
$
|
55,686
|
|
|
$
|
78,468
|
|
|
$
|
6,314,758
|
|
|
$
|
6,393,226
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Nonaccrual loans
|
$
|
68,528
|
|
|
$
|
58,272
|
|
Nonaccrual troubled debt restructured loans
|
4,532
|
|
|
4,309
|
|
||
Total nonaccrual loans
|
$
|
73,060
|
|
|
$
|
62,581
|
|
Accruing loans past due 90 days or more
|
$
|
154
|
|
|
$
|
830
|
|
Performing troubled debt restructured loans
|
$
|
4,180
|
|
|
$
|
6,617
|
|
|
Three Months Ended
September 30, |
||||||||||||||||||||
|
2018
|
|
2017
|
||||||||||||||||||
|
Number
of Loans |
|
Pre-
Modification Recorded Investment |
|
Post-
Modification Recorded Investment |
|
Number
of Loans |
|
Pre-
Modification Recorded Investment |
|
Post-
Modification Recorded Investment |
||||||||||
Commercial
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commercial real estate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total commercial and commercial real estate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Agricultural and agricultural real estate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Residential real estate
|
1
|
|
|
92
|
|
|
94
|
|
|
8
|
|
|
1,174
|
|
|
1,174
|
|
||||
Consumer
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total
|
1
|
|
|
$
|
92
|
|
|
$
|
94
|
|
|
8
|
|
|
$
|
1,174
|
|
|
$
|
1,174
|
|
|
Nine Months Ended
September 30, |
||||||||||||||||||||
|
2018
|
|
2017
|
||||||||||||||||||
|
Number
of Loans
|
|
Pre-
Modification
Recorded
Investment
|
|
Post-
Modification
Recorded
Investment
|
|
Number
of Loans
|
|
Pre-
Modification
Recorded
Investment
|
|
Post-
Modification
Recorded
Investment
|
||||||||||
Commercial
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
3
|
|
|
$
|
131
|
|
|
$
|
131
|
|
Commercial real estate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total commercial and commercial real estate
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
131
|
|
|
131
|
|
||||
Agricultural and agricultural real estate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Residential real estate
|
11
|
|
|
2,098
|
|
|
1,808
|
|
|
22
|
|
|
2,977
|
|
|
2,977
|
|
||||
Consumer
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total
|
11
|
|
|
$
|
2,098
|
|
|
$
|
1,808
|
|
|
25
|
|
|
$
|
3,108
|
|
|
$
|
3,108
|
|
|
With Payment Defaults During the
|
||||||||||||
|
Three Months Ended
September 30,
|
||||||||||||
|
2018
|
|
2017
|
||||||||||
|
Number of Loans
|
|
Recorded Investment
|
|
Number of Loans
|
|
Recorded Investment
|
||||||
Commercial
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Commercial real estate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Total commercial and commercial real estate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Agricultural and agricultural real estate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Residential real estate
|
4
|
|
|
418
|
|
|
5
|
|
|
1,221
|
|
||
Consumer
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Total
|
4
|
|
|
$
|
418
|
|
|
5
|
|
|
$
|
1,221
|
|
|
With Payment Defaults During the
|
||||||||||||
|
Nine Months Ended
September 30,
|
||||||||||||
|
2018
|
|
2017
|
||||||||||
|
Number of Loans
|
|
Recorded Investment
|
|
Number of Loans
|
|
Recorded Investment
|
||||||
Commercial
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Commercial real estate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Total commercial and commercial real estate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Agricultural and agricultural real estate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Residential real estate
|
10
|
|
|
1,598
|
|
|
8
|
|
|
1,480
|
|
||
Consumer
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Total
|
10
|
|
|
$
|
1,598
|
|
|
8
|
|
|
$
|
1,480
|
|
|
Pass
|
|
Nonpass
|
|
Total
|
||||||
September 30, 2018
|
|
|
|
|
|
||||||
Commercial
|
$
|
1,825,692
|
|
|
$
|
136,530
|
|
|
$
|
1,962,222
|
|
Commercial real estate
|
3,467,522
|
|
|
181,209
|
|
|
3,648,731
|
|
|||
Total commercial and commercial real estate
|
5,293,214
|
|
|
317,739
|
|
|
5,610,953
|
|
|||
Agricultural and agricultural real estate
|
476,261
|
|
|
97,787
|
|
|
574,048
|
|
|||
Residential real estate
|
644,592
|
|
|
32,349
|
|
|
676,941
|
|
|||
Consumer
|
491,092
|
|
|
15,089
|
|
|
506,181
|
|
|||
Total gross loans receivable held to maturity
|
$
|
6,905,159
|
|
|
$
|
462,964
|
|
|
$
|
7,368,123
|
|
December 31, 2017
|
|
|
|
|
|
||||||
Commercial
|
$
|
1,552,783
|
|
|
$
|
93,823
|
|
|
$
|
1,646,606
|
|
Commercial real estate
|
2,985,501
|
|
|
177,768
|
|
|
3,163,269
|
|
|||
Total commercial and commercial real estate
|
4,538,284
|
|
|
271,591
|
|
|
4,809,875
|
|
|||
Agricultural and agricultural real estate
|
451,539
|
|
|
60,049
|
|
|
511,588
|
|
|||
Residential real estate
|
586,623
|
|
|
37,656
|
|
|
624,279
|
|
|||
Consumer
|
432,936
|
|
|
14,548
|
|
|
447,484
|
|
|||
Total gross loans receivable held to maturity
|
$
|
6,009,382
|
|
|
$
|
383,844
|
|
|
$
|
6,393,226
|
|
|
Accruing Loans
|
|
|
|
|
||||||||||||||||||||||
|
30-59 Days
Past Due
|
|
60-89 Days
Past Due |
|
90 Days or
More
Past Due
|
|
Total
Past Due
|
|
Current
|
|
Nonaccrual
|
|
Total Loans
|
||||||||||||||
September 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Commercial
|
$
|
10,558
|
|
|
$
|
3,521
|
|
|
$
|
61
|
|
|
$
|
14,140
|
|
|
$
|
1,924,173
|
|
|
$
|
23,909
|
|
|
$
|
1,962,222
|
|
Commercial real estate
|
11,495
|
|
|
9,036
|
|
|
58
|
|
|
20,589
|
|
|
3,616,737
|
|
|
11,405
|
|
|
3,648,731
|
|
|||||||
Total commercial and commercial real estate
|
22,053
|
|
|
12,557
|
|
|
119
|
|
|
34,729
|
|
|
5,540,910
|
|
|
35,314
|
|
|
5,610,953
|
|
|||||||
Agricultural and agricultural real estate
|
1,294
|
|
|
1,146
|
|
|
35
|
|
|
2,475
|
|
|
554,055
|
|
|
17,518
|
|
|
574,048
|
|
|||||||
Residential real estate
|
2,893
|
|
|
192
|
|
|
—
|
|
|
3,085
|
|
|
659,662
|
|
|
14,194
|
|
|
676,941
|
|
|||||||
Consumer
|
4,493
|
|
|
811
|
|
|
—
|
|
|
5,304
|
|
|
494,843
|
|
|
6,034
|
|
|
506,181
|
|
|||||||
Total gross loans receivable held to maturity
|
$
|
30,733
|
|
|
$
|
14,706
|
|
|
$
|
154
|
|
|
$
|
45,593
|
|
|
$
|
7,249,470
|
|
|
$
|
73,060
|
|
|
$
|
7,368,123
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Commercial
|
$
|
1,246
|
|
|
$
|
259
|
|
|
$
|
100
|
|
|
$
|
1,605
|
|
|
$
|
1,637,773
|
|
|
$
|
7,228
|
|
|
$
|
1,646,606
|
|
Commercial real estate
|
4,769
|
|
|
2,326
|
|
|
—
|
|
|
7,095
|
|
|
3,139,576
|
|
|
16,598
|
|
|
3,163,269
|
|
|||||||
Total commercial and commercial real estate
|
6,015
|
|
|
2,585
|
|
|
100
|
|
|
8,700
|
|
|
4,777,349
|
|
|
23,826
|
|
|
4,809,875
|
|
|||||||
Agricultural and agricultural real estate
|
604
|
|
|
134
|
|
|
—
|
|
|
738
|
|
|
497,546
|
|
|
13,304
|
|
|
511,588
|
|
|||||||
Residential real estate
|
2,022
|
|
|
270
|
|
|
—
|
|
|
2,292
|
|
|
601,120
|
|
|
20,867
|
|
|
624,279
|
|
|||||||
Consumer
|
4,734
|
|
|
943
|
|
|
730
|
|
|
6,407
|
|
|
436,493
|
|
|
4,584
|
|
|
447,484
|
|
|||||||
Total gross loans receivable held to maturity
|
$
|
13,375
|
|
|
$
|
3,932
|
|
|
$
|
830
|
|
|
$
|
18,137
|
|
|
$
|
6,312,508
|
|
|
$
|
62,581
|
|
|
$
|
6,393,226
|
|
|
Unpaid
Contractual
Balance
|
|
Loan
Balance
|
|
Related
Allowance
Recorded
|
|
Quarter-
to-
Date
Avg.
Loan
Balance
|
|
Quarter-
to-
Date
Interest
Income
Recognized
|
|
Year-
to-
Date
Avg.
Loan
Balance
|
|
Year-
to-
Date
Interest
Income
Recognized
|
||||||||||||||
September 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Impaired loans with a related allowance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Commercial
|
$
|
6,768
|
|
|
$
|
6,768
|
|
|
$
|
4,165
|
|
|
$
|
5,173
|
|
|
$
|
16
|
|
|
$
|
3,593
|
|
|
$
|
52
|
|
Commercial real estate
|
748
|
|
|
748
|
|
|
214
|
|
|
889
|
|
|
4
|
|
|
5,635
|
|
|
20
|
|
|||||||
Total commercial and commercial real estate
|
7,516
|
|
|
7,516
|
|
|
4,379
|
|
|
6,062
|
|
|
20
|
|
|
9,228
|
|
|
72
|
|
|||||||
Agricultural and agricultural real estate
|
2,043
|
|
|
2,043
|
|
|
260
|
|
|
3,000
|
|
|
2
|
|
|
2,369
|
|
|
2
|
|
|||||||
Residential real estate
|
869
|
|
|
869
|
|
|
279
|
|
|
1,006
|
|
|
4
|
|
|
1,278
|
|
|
10
|
|
|||||||
Consumer
|
3,028
|
|
|
3,028
|
|
|
1,085
|
|
|
3,146
|
|
|
9
|
|
|
3,069
|
|
|
29
|
|
|||||||
Total impaired loans with a related allowance
|
$
|
13,456
|
|
|
$
|
13,456
|
|
|
$
|
6,003
|
|
|
$
|
13,214
|
|
|
$
|
35
|
|
|
$
|
15,944
|
|
|
$
|
113
|
|
Impaired loans without a related allowance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Commercial
|
$
|
18,003
|
|
|
$
|
16,646
|
|
|
$
|
—
|
|
|
$
|
13,113
|
|
|
$
|
182
|
|
|
$
|
9,307
|
|
|
$
|
277
|
|
Commercial real estate
|
13,765
|
|
|
13,667
|
|
|
—
|
|
|
11,850
|
|
|
80
|
|
|
12,847
|
|
|
201
|
|
|||||||
Total commercial and commercial real estate
|
31,768
|
|
|
30,313
|
|
|
—
|
|
|
24,963
|
|
|
262
|
|
|
22,154
|
|
|
478
|
|
|||||||
Agricultural and agricultural real estate
|
18,002
|
|
|
15,479
|
|
|
—
|
|
|
15,837
|
|
|
1
|
|
|
14,726
|
|
|
4
|
|
|||||||
Residential real estate
|
22,778
|
|
|
22,778
|
|
|
—
|
|
|
22,779
|
|
|
121
|
|
|
24,780
|
|
|
320
|
|
|||||||
Consumer
|
5,643
|
|
|
5,643
|
|
|
—
|
|
|
5,522
|
|
|
22
|
|
|
4,930
|
|
|
78
|
|
|||||||
Total impaired loans without a related allowance
|
$
|
78,191
|
|
|
$
|
74,213
|
|
|
$
|
—
|
|
|
$
|
69,101
|
|
|
$
|
406
|
|
|
$
|
66,590
|
|
|
$
|
880
|
|
Total impaired loans held to maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Commercial
|
$
|
24,771
|
|
|
$
|
23,414
|
|
|
$
|
4,165
|
|
|
$
|
18,286
|
|
|
$
|
198
|
|
|
$
|
12,900
|
|
|
$
|
329
|
|
Commercial real estate
|
14,513
|
|
|
14,415
|
|
|
214
|
|
|
12,739
|
|
|
84
|
|
|
18,482
|
|
|
221
|
|
|||||||
Total commercial and commercial real estate
|
39,284
|
|
|
37,829
|
|
|
4,379
|
|
|
31,025
|
|
|
282
|
|
|
31,382
|
|
|
550
|
|
|||||||
Agricultural and agricultural real estate
|
20,045
|
|
|
17,522
|
|
|
260
|
|
|
18,837
|
|
|
3
|
|
|
17,095
|
|
|
6
|
|
|||||||
Residential real estate
|
23,647
|
|
|
23,647
|
|
|
279
|
|
|
23,785
|
|
|
125
|
|
|
26,058
|
|
|
330
|
|
|||||||
Consumer
|
8,671
|
|
|
8,671
|
|
|
1,085
|
|
|
8,668
|
|
|
31
|
|
|
7,999
|
|
|
107
|
|
|||||||
Total impaired loans held to maturity
|
$
|
91,647
|
|
|
$
|
87,669
|
|
|
$
|
6,003
|
|
|
$
|
82,315
|
|
|
$
|
441
|
|
|
$
|
82,534
|
|
|
$
|
993
|
|
|
Unpaid
Contractual
Balance
|
|
Loan
Balance
|
|
Related
Allowance
Recorded
|
|
Year-to-
Date
Avg.
Loan
Balance
|
|
Year-to-
Date
Interest
Income
Recognized
|
||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Impaired loans with a related allowance:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial
|
$
|
2,292
|
|
|
$
|
2,292
|
|
|
$
|
1,613
|
|
|
$
|
3,607
|
|
|
$
|
39
|
|
Commercial real estate
|
11,925
|
|
|
10,068
|
|
|
766
|
|
|
11,479
|
|
|
34
|
|
|||||
Total commercial and commercial real estate
|
14,217
|
|
|
12,360
|
|
|
2,379
|
|
|
15,086
|
|
|
73
|
|
|||||
Agricultural and agricultural real estate
|
1,539
|
|
|
1,539
|
|
|
546
|
|
|
3,437
|
|
|
—
|
|
|||||
Residential real estate
|
1,568
|
|
|
1,568
|
|
|
430
|
|
|
2,056
|
|
|
15
|
|
|||||
Consumer
|
2,634
|
|
|
2,634
|
|
|
1,400
|
|
|
2,370
|
|
|
41
|
|
|||||
Total impaired loans with a related allowance
|
$
|
19,958
|
|
|
$
|
18,101
|
|
|
$
|
4,755
|
|
|
$
|
22,949
|
|
|
$
|
129
|
|
Impaired loans without a related allowance:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial
|
$
|
6,243
|
|
|
$
|
5,123
|
|
|
$
|
—
|
|
|
$
|
2,586
|
|
|
$
|
165
|
|
Commercial real estate
|
14,243
|
|
|
13,637
|
|
|
—
|
|
|
20,148
|
|
|
514
|
|
|||||
Total commercial and commercial real estate
|
20,486
|
|
|
18,760
|
|
|
—
|
|
|
22,734
|
|
|
679
|
|
|||||
Agricultural and agricultural real estate
|
13,793
|
|
|
11,765
|
|
|
—
|
|
|
9,654
|
|
|
—
|
|
|||||
Residential real estate
|
25,573
|
|
|
25,573
|
|
|
—
|
|
|
26,024
|
|
|
277
|
|
|||||
Consumer
|
4,269
|
|
|
4,269
|
|
|
—
|
|
|
3,884
|
|
|
73
|
|
|||||
Total impaired loans without a related allowance
|
$
|
64,121
|
|
|
$
|
60,367
|
|
|
$
|
—
|
|
|
$
|
62,296
|
|
|
$
|
1,029
|
|
Total impaired loans held to maturity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial
|
$
|
8,535
|
|
|
$
|
7,415
|
|
|
$
|
1,613
|
|
|
$
|
6,193
|
|
|
$
|
204
|
|
Commercial real estate
|
26,168
|
|
|
23,705
|
|
|
766
|
|
|
31,627
|
|
|
548
|
|
|||||
Total commercial and commercial real estate
|
34,703
|
|
|
31,120
|
|
|
2,379
|
|
|
37,820
|
|
|
752
|
|
|||||
Agricultural and agricultural real estate
|
15,332
|
|
|
13,304
|
|
|
546
|
|
|
13,091
|
|
|
—
|
|
|||||
Residential real estate
|
27,141
|
|
|
27,141
|
|
|
430
|
|
|
28,080
|
|
|
292
|
|
|||||
Consumer
|
6,903
|
|
|
6,903
|
|
|
1,400
|
|
|
6,254
|
|
|
114
|
|
|||||
Total impaired loans held to maturity
|
$
|
84,079
|
|
|
$
|
78,468
|
|
|
$
|
4,755
|
|
|
$
|
85,245
|
|
|
$
|
1,158
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
Impaired
Purchased Loans |
|
Non
Impaired
Purchased Loans |
|
Total
Purchased
Loans
|
|
Impaired
Purchased Loans |
|
Non
Impaired
Purchased Loans |
|
Total
Purchased
Loans
|
||||||||||||
Commercial
|
$
|
9,078
|
|
|
$
|
300,261
|
|
|
$
|
309,339
|
|
|
$
|
952
|
|
|
$
|
187,375
|
|
|
$
|
188,327
|
|
Commercial real estate
|
302
|
|
|
1,202,537
|
|
|
1,202,839
|
|
|
2,572
|
|
|
1,052,469
|
|
|
1,055,041
|
|
||||||
Agricultural and agricultural real estate
|
—
|
|
|
32,357
|
|
|
32,357
|
|
|
—
|
|
|
1,242
|
|
|
1,242
|
|
||||||
Residential real estate
|
220
|
|
|
204,414
|
|
|
204,634
|
|
|
214
|
|
|
173,909
|
|
|
174,123
|
|
||||||
Consumer loans
|
—
|
|
|
89,061
|
|
|
89,061
|
|
|
—
|
|
|
51,292
|
|
|
51,292
|
|
||||||
Total loans
|
$
|
9,600
|
|
|
$
|
1,828,630
|
|
|
$
|
1,838,230
|
|
|
$
|
3,738
|
|
|
$
|
1,466,287
|
|
|
$
|
1,470,025
|
|
|
Commercial
|
|
Commercial
Real Estate
|
|
Agricultural and Agricultural Real Estate
|
|
Residential
Real Estate
|
|
Consumer
|
|
Total
|
||||||||||||
Balance at June 30, 2018
|
$
|
20,709
|
|
|
$
|
23,727
|
|
|
$
|
5,709
|
|
|
$
|
1,857
|
|
|
$
|
9,322
|
|
|
$
|
61,324
|
|
Charge-offs
|
(2,945
|
)
|
|
(199
|
)
|
|
(1,145
|
)
|
|
—
|
|
|
(1,831
|
)
|
|
(6,120
|
)
|
||||||
Recoveries
|
158
|
|
|
242
|
|
|
—
|
|
|
1
|
|
|
378
|
|
|
779
|
|
||||||
Provision
|
4,147
|
|
|
(80
|
)
|
|
2
|
|
|
(8
|
)
|
|
1,177
|
|
|
5,238
|
|
||||||
Balance at September 30, 2018
|
$
|
22,069
|
|
|
$
|
23,690
|
|
|
$
|
4,566
|
|
|
$
|
1,850
|
|
|
$
|
9,046
|
|
|
$
|
61,221
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Commercial
|
|
Commercial
Real Estate
|
|
Agricultural and Agricultural Real Estate
|
|
Residential
Real Estate
|
|
Consumer
|
|
Total
|
||||||||||||
Balance at December 31, 2017
|
$
|
18,098
|
|
|
$
|
21,950
|
|
|
$
|
4,258
|
|
|
$
|
2,224
|
|
|
$
|
9,156
|
|
|
$
|
55,686
|
|
Charge-offs
|
(4,717
|
)
|
|
(761
|
)
|
|
(1,357
|
)
|
|
(211
|
)
|
|
(4,462
|
)
|
|
(11,508
|
)
|
||||||
Recoveries
|
562
|
|
|
1,013
|
|
|
14
|
|
|
77
|
|
|
1,045
|
|
|
2,711
|
|
||||||
Provision
|
8,126
|
|
|
1,488
|
|
|
1,651
|
|
|
(240
|
)
|
|
3,307
|
|
|
14,332
|
|
||||||
Balance at September 30, 2018
|
$
|
22,069
|
|
|
$
|
23,690
|
|
|
$
|
4,566
|
|
|
$
|
1,850
|
|
|
$
|
9,046
|
|
|
$
|
61,221
|
|
|
Commercial
|
|
Commercial
Real Estate
|
|
Agricultural and Agricultural Real Estate
|
|
Residential
Real Estate
|
|
Consumer
|
|
Total
|
||||||||||||
Balance at June 30, 2017
|
$
|
17,168
|
|
|
$
|
21,861
|
|
|
$
|
3,832
|
|
|
$
|
2,263
|
|
|
$
|
8,927
|
|
|
$
|
54,051
|
|
Charge-offs
|
(1,954
|
)
|
|
(1,913
|
)
|
|
—
|
|
|
(142
|
)
|
|
(1,750
|
)
|
|
(5,759
|
)
|
||||||
Recoveries
|
347
|
|
|
46
|
|
|
14
|
|
|
63
|
|
|
418
|
|
|
888
|
|
||||||
Provision
|
1,409
|
|
|
546
|
|
|
2,281
|
|
|
82
|
|
|
1,387
|
|
|
5,705
|
|
||||||
Balance at September 30, 2017
|
$
|
16,970
|
|
|
$
|
20,540
|
|
|
$
|
6,127
|
|
|
$
|
2,266
|
|
|
$
|
8,982
|
|
|
$
|
54,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Commercial
|
|
Commercial
Real Estate
|
|
Agricultural and Agricultural Real Estate
|
|
Residential
Real Estate
|
|
Consumer
|
|
Total
|
||||||||||||
Balance at December 31, 2016
|
$
|
14,765
|
|
|
$
|
24,319
|
|
|
$
|
4,210
|
|
|
$
|
2,263
|
|
|
$
|
8,767
|
|
|
$
|
54,324
|
|
Charge-offs
|
(3,310
|
)
|
|
(2,522
|
)
|
|
(888
|
)
|
|
(541
|
)
|
|
(4,982
|
)
|
|
(12,243
|
)
|
||||||
Recoveries
|
635
|
|
|
860
|
|
|
17
|
|
|
70
|
|
|
987
|
|
|
2,569
|
|
||||||
Provision
|
4,880
|
|
|
(2,117
|
)
|
|
2,788
|
|
|
474
|
|
|
4,210
|
|
|
10,235
|
|
||||||
Balance at September 30, 2017
|
$
|
16,970
|
|
|
$
|
20,540
|
|
|
$
|
6,127
|
|
|
$
|
2,266
|
|
|
$
|
8,982
|
|
|
$
|
54,885
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
||||||||||||
Amortizing intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Core deposit intangibles
|
$
|
83,639
|
|
|
$
|
33,820
|
|
|
$
|
49,819
|
|
|
$
|
62,008
|
|
|
$
|
27,086
|
|
|
$
|
34,922
|
|
Customer relationship intangibles
|
1,177
|
|
|
925
|
|
|
252
|
|
|
1,177
|
|
|
896
|
|
|
281
|
|
||||||
Mortgage servicing rights
|
42,616
|
|
|
12,445
|
|
|
30,171
|
|
|
42,139
|
|
|
18,891
|
|
|
23,248
|
|
||||||
Commercial servicing rights
|
6,800
|
|
|
4,932
|
|
|
1,868
|
|
|
6,719
|
|
|
4,110
|
|
|
2,609
|
|
||||||
Total
|
$
|
134,232
|
|
|
$
|
52,122
|
|
|
$
|
82,110
|
|
|
$
|
112,043
|
|
|
$
|
50,983
|
|
|
$
|
61,060
|
|
|
Core
Deposit
Intangibles
|
|
Customer
Relationship
Intangibles
|
|
Mortgage
Servicing
Rights
|
|
Commercial
Servicing
Rights
|
|
Total
|
||||||||||
Three months ending December 31, 2018
|
$
|
2,583
|
|
|
$
|
10
|
|
|
$
|
1,642
|
|
|
$
|
139
|
|
|
$
|
4,374
|
|
Year ending December 31,
|
|
|
|
|
|
|
|
|
|
||||||||||
2019
|
9,452
|
|
|
38
|
|
|
7,132
|
|
|
485
|
|
|
17,107
|
|
|||||
2020
|
8,230
|
|
|
37
|
|
|
6,113
|
|
|
379
|
|
|
14,759
|
|
|||||
2021
|
7,036
|
|
|
35
|
|
|
5,094
|
|
|
331
|
|
|
12,496
|
|
|||||
2022
|
5,634
|
|
|
34
|
|
|
4,076
|
|
|
270
|
|
|
10,014
|
|
|||||
2023
|
4,933
|
|
|
34
|
|
|
3,057
|
|
|
154
|
|
|
8,178
|
|
|||||
Thereafter
|
11,951
|
|
|
64
|
|
|
3,057
|
|
|
110
|
|
|
15,182
|
|
|||||
Total
|
$
|
49,819
|
|
|
$
|
252
|
|
|
$
|
30,171
|
|
|
$
|
1,868
|
|
|
$
|
82,110
|
|
|
2018
|
|
2017
|
||||
Balance at January 1,
|
$
|
23,248
|
|
|
$
|
32,088
|
|
Originations
|
4,322
|
|
|
5,778
|
|
||
Amortization
|
(4,394
|
)
|
|
(7,184
|
)
|
||
Valuation allowance on mortgage servicing rights
|
—
|
|
|
—
|
|
||
Sale of mortgage servicing rights
|
—
|
|
|
(6,940
|
)
|
||
Acquired mortgage servicing rights
|
6,995
|
|
|
—
|
|
||
Balance at period end
|
$
|
30,171
|
|
|
$
|
23,742
|
|
Fair value of mortgage servicing rights
|
$
|
47,581
|
|
|
$
|
35,002
|
|
Mortgage servicing rights, net to servicing portfolio
|
0.73
|
%
|
|
0.67
|
%
|
|
2018
|
|
2017
|
||||
Balance at January 1,
|
$
|
2,609
|
|
|
$
|
3,690
|
|
Originations
|
82
|
|
|
215
|
|
||
Amortization
|
(835
|
)
|
|
(1,077
|
)
|
||
Valuation allowance on commercial servicing rights
|
12
|
|
|
29
|
|
||
Balance at period end
|
$
|
1,868
|
|
|
$
|
2,857
|
|
Fair value of commercial servicing rights
|
$
|
2,529
|
|
|
$
|
3,458
|
|
Commercial servicing rights, net to servicing portfolio
|
1.63
|
%
|
|
1.98
|
%
|
September 30, 2018
|
Book Value 15-Year Tranche
|
|
Fair Value 15-Year Tranche
|
|
Impairment 15-Year Tranche
|
|
Book Value 30-Year Tranche
|
|
Fair Value 30-Year Tranche
|
|
Impairment 30-Year Tranche
|
||||||||||||
Dubuque Bank and Trust Company
|
$
|
2,371
|
|
|
$
|
4,747
|
|
|
$
|
—
|
|
|
$
|
20,632
|
|
|
$
|
35,610
|
|
|
$
|
—
|
|
First Bank & Trust
|
1,685
|
|
|
1,741
|
|
|
—
|
|
|
5,483
|
|
|
5,483
|
|
|
—
|
|
||||||
Total
|
$
|
4,056
|
|
|
$
|
6,488
|
|
|
$
|
—
|
|
|
$
|
26,115
|
|
|
$
|
41,093
|
|
|
$
|
—
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Dubuque Bank and Trust Company
|
$
|
2,858
|
|
|
$
|
4,988
|
|
|
$
|
—
|
|
|
$
|
20,390
|
|
|
$
|
32,093
|
|
|
$
|
—
|
|
Total
|
$
|
2,858
|
|
|
$
|
4,988
|
|
|
$
|
—
|
|
|
$
|
20,390
|
|
|
$
|
32,093
|
|
|
$
|
—
|
|
September 30, 2018
|
Book Value
Less than
20 Years
|
|
Fair Value
Less than
20 Years
|
|
Impairment
Less than
20 Years
|
|
Book Value
More than
20 Years
|
|
Fair Value
More than
20 Years
|
|
Impairment
More than
20 Years
|
||||||||||||
Citywide Banks
|
$
|
2
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
30
|
|
|
$
|
33
|
|
|
$
|
—
|
|
Premier Valley Bank
|
53
|
|
|
82
|
|
|
—
|
|
|
188
|
|
|
203
|
|
|
—
|
|
||||||
Wisconsin Bank & Trust
|
260
|
|
|
519
|
|
|
—
|
|
|
1,335
|
|
|
1,686
|
|
|
—
|
|
||||||
Total
|
$
|
315
|
|
|
$
|
607
|
|
|
$
|
—
|
|
|
$
|
1,553
|
|
|
$
|
1,922
|
|
|
$
|
—
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Citywide Banks
|
$
|
8
|
|
|
$
|
11
|
|
|
$
|
—
|
|
|
$
|
34
|
|
|
$
|
37
|
|
|
$
|
—
|
|
Premier Valley Bank
|
83
|
|
|
110
|
|
|
—
|
|
|
303
|
|
|
291
|
|
|
12
|
|
||||||
Wisconsin Bank & Trust
|
446
|
|
|
619
|
|
|
—
|
|
|
1,747
|
|
|
2,153
|
|
|
—
|
|
||||||
Total
|
$
|
537
|
|
|
$
|
740
|
|
|
$
|
—
|
|
|
$
|
2,084
|
|
|
$
|
2,481
|
|
|
$
|
12
|
|
|
Notional
Amount
|
|
Fair
Value
|
|
Balance
Sheet
Category
|
|
Receive
Rate
|
|
Weighted
Average
Pay Rate
|
|
Maturity
|
||||||
September 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest rate swap
|
$
|
25,000
|
|
|
$
|
424
|
|
|
Other assets
|
|
2.334
|
%
|
|
2.255
|
%
|
|
03/17/2021
|
Interest rate swap
|
20,000
|
|
|
(186
|
)
|
|
Other liabilities
|
|
2.339
|
|
|
3.355
|
|
|
01/07/2020
|
||
Interest rate swap
|
10,000
|
|
|
42
|
|
|
Other assets
|
|
2.374
|
|
|
1.674
|
|
|
03/26/2019
|
||
Interest rate swap
|
10,000
|
|
|
42
|
|
|
Other assets
|
|
2.334
|
|
|
1.658
|
|
|
03/18/2019
|
||
Interest rate swap
|
30,667
|
|
|
1,089
|
|
|
Other assets
|
|
4.633
|
|
|
3.674
|
|
|
05/10/2021
|
||
Interest rate swap
|
29,500
|
|
|
(33
|
)
|
|
Other liabilities
|
|
4.712
|
|
|
5.425
|
|
|
07/24/2028
|
||
Interest rate swap
|
20,000
|
|
|
652
|
|
|
Other assets
|
|
2.334
|
|
|
2.390
|
|
|
06/15/2024
|
||
Interest rate swap
|
20,000
|
|
|
666
|
|
|
Other assets
|
|
2.321
|
|
|
2.352
|
|
|
03/01/2024
|
||
Interest rate swap
|
6,000
|
|
|
175
|
|
|
Other assets
|
|
2.334
|
|
|
1.866
|
|
|
06/15/2021
|
||
Interest rate swap
|
3,000
|
|
|
92
|
|
|
Other assets
|
|
2.436
|
|
|
1.878
|
|
|
06/30/2021
|
||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest rate swap
|
$
|
25,000
|
|
|
$
|
(106
|
)
|
|
Other liabilities
|
|
1.600
|
%
|
|
2.255
|
%
|
|
03/17/2021
|
Interest rate swap
|
20,000
|
|
|
(621
|
)
|
|
Other liabilities
|
|
1.350
|
|
|
3.355
|
|
|
01/07/2020
|
||
Interest rate swap
|
10,000
|
|
|
30
|
|
|
Other assets
|
|
1.329
|
|
|
1.674
|
|
|
03/26/2019
|
||
Interest rate swap
|
10,000
|
|
|
29
|
|
|
Other assets
|
|
1.600
|
|
|
1.658
|
|
|
03/18/2019
|
||
Interest rate swap
|
33,667
|
|
|
759
|
|
|
Other assets
|
|
3.932
|
|
|
3.674
|
|
|
05/10/2021
|
||
Interest rate swap
|
20,000
|
|
|
(177
|
)
|
|
Other liabilities
|
|
1.588
|
|
|
2.390
|
|
|
06/15/2024
|
||
Interest rate swap
|
20,000
|
|
|
(149
|
)
|
|
Other Liabilities
|
|
1.481
|
|
|
2.352
|
|
|
03/01/2024
|
|
Effective Portion
|
|
Ineffective Portion
|
||||||||||||
|
Recognized in OCI
|
|
Reclassified from AOCI into Income
|
|
Recognized in Income on Derivatives
|
||||||||||
|
Amount of
Gain (Loss)
|
|
Category
|
|
Amount of
Gain (Loss)
|
|
Category
|
|
Amount of
Gain (Loss)
|
||||||
Three Months Ended September 30, 2018
|
|
|
|
|
|
|
|
|
|
||||||
Interest rate swaps
|
$
|
375
|
|
|
Interest expense
|
|
$
|
21
|
|
|
Other income
|
|
$
|
—
|
|
Nine Months Ended September 30, 2018
|
|
|
|
|
|
|
|
|
|
||||||
Interest rate swaps
|
$
|
3,198
|
|
|
Interest expense
|
|
$
|
(207
|
)
|
|
Other income
|
|
$
|
—
|
|
Three Months Ended September 30, 2017
|
|
|
|
|
|
|
|
|
|
||||||
Interest rate swaps
|
$
|
325
|
|
|
Interest expense
|
|
$
|
(308
|
)
|
|
Other income
|
|
$
|
—
|
|
Nine Months Ended September 30, 2017
|
|
|
|
|
|
|
|
|
|
||||||
Interest rate swaps
|
$
|
349
|
|
|
Interest expense
|
|
$
|
(1,005
|
)
|
|
Other income
|
|
$
|
—
|
|
|
Notional Amount
|
|
Fair Value
|
|
Balance Sheet Category
|
||||
September 30, 2018
|
|
|
|
|
|
||||
Fair value hedges
|
$
|
30,954
|
|
|
$
|
625
|
|
|
Other assets
|
Fair value hedges
|
4,133
|
|
|
(201
|
)
|
|
Other liabilities
|
||
December 31, 2017
|
|
|
|
|
|
||||
Fair value hedges
|
$
|
35,635
|
|
|
$
|
(999
|
)
|
|
Other liabilities
|
|
|
Amount of Gain (Loss)
|
|
Income Statement Category
|
||
Three Months Ended September 30, 2018
|
|
|
|
|
||
Fair value hedges
|
|
$
|
179
|
|
|
Interest income
|
Nine Months Ended September 30, 2018
|
|
|
|
|
||
Fair value hedges
|
|
$
|
1,423
|
|
|
Interest income
|
Three Months Ended September 30, 2017
|
|
|
|
|
||
Fair value hedges
|
|
$
|
(63
|
)
|
|
Interest income
|
Nine Months Ended September 30, 2017
|
|
|
|
|
||
Fair value hedges
|
|
$
|
89
|
|
|
Interest income
|
|
Notional Amount
|
|
Fair Value
|
|
Balance Sheet Category
|
||||
September 30, 2018
|
|
|
|
|
|
||||
Embedded derivatives
|
$
|
13,643
|
|
|
$
|
215
|
|
|
Other assets
|
December 31, 2017
|
|
|
|
|
|
||||
Embedded derivatives
|
$
|
14,045
|
|
|
$
|
738
|
|
|
Other assets
|
|
|
Amount of Gain (Loss)
|
|
Income Statement Category
|
||
Three Months Ended September 30, 2018
|
|
|
|
|
||
Embedded derivatives
|
|
$
|
108
|
|
|
Other noninterest income
|
Nine Months Ended September 30, 2018
|
|
|
|
|
||
Embedded derivatives
|
|
$
|
523
|
|
|
Other noninterest income
|
Three Months Ended September 30, 2017
|
|
|
|
|
||
Embedded derivatives
|
|
$
|
(296
|
)
|
|
Other noninterest income
|
Nine Months Ended September 30, 2017
|
|
|
|
|
||
Embedded derivatives
|
|
$
|
(181
|
)
|
|
Other noninterest income
|
|
|
Notional
Amount
|
|
Fair
Value
|
|
Balance Sheet
Category
|
|
Weighted
Average
Receive
Rate
|
|
Weighted
Average
Pay
Rate
|
||||||
September 30, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||
Customer interest rate swaps
|
|
$
|
200,241
|
|
|
$
|
5,305
|
|
|
Other assets
|
|
5.07
|
%
|
|
4.68
|
%
|
Customer interest rate swaps
|
|
200,241
|
|
|
(5,305
|
)
|
|
Other liabilities
|
|
4.68
|
|
|
5.07
|
|
||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
||||||
Customer interest rate swaps
|
|
$
|
126,766
|
|
|
$
|
2,377
|
|
|
Other assets
|
|
4.70
|
%
|
|
4.03
|
%
|
Customer interest rate swaps
|
|
126,766
|
|
|
(2,377
|
)
|
|
Other liabilities
|
|
4.03
|
|
|
4.70
|
|
|
Balance Sheet
Category
|
|
Notional
Amount
|
|
Fair
Value
|
||||
September 30, 2018
|
|
|
|
|
|
||||
Interest rate lock commitments (mortgage)
|
Other assets
|
|
$
|
52,649
|
|
|
$
|
1,539
|
|
Forward commitments
|
Other assets
|
|
82,500
|
|
|
353
|
|
||
Forward commitments
|
Other liabilities
|
|
33,500
|
|
|
(69
|
)
|
||
Undesignated interest rate swaps
|
Other liabilities
|
|
13,643
|
|
|
(215
|
)
|
||
December 31, 2017
|
|
|
|
|
|
|
|
||
Interest rate lock commitments (mortgage)
|
Other assets
|
|
$
|
53,588
|
|
|
$
|
1,738
|
|
Forward commitments
|
Other assets
|
|
37,286
|
|
|
80
|
|
||
Forward commitments
|
Other liabilities
|
|
118,632
|
|
|
(232
|
)
|
||
Undesignated interest rate swaps
|
Other liabilities
|
|
14,045
|
|
|
(738
|
)
|
|
Fair Value Measurements at
September 30, 2018 |
||||||||||||||||||
|
Total
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Year-to-
Date (Gains)
Losses
|
||||||||||
Collateral dependent impaired loans:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial
|
$
|
6,772
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,772
|
|
|
$
|
237
|
|
Commercial real estate
|
420
|
|
|
—
|
|
|
—
|
|
|
420
|
|
|
72
|
|
|||||
Agricultural and agricultural real estate
|
11,821
|
|
|
—
|
|
|
—
|
|
|
11,821
|
|
|
495
|
|
|||||
Residential real estate
|
590
|
|
|
—
|
|
|
—
|
|
|
590
|
|
|
—
|
|
|||||
Consumer
|
1,942
|
|
|
—
|
|
|
—
|
|
|
1,942
|
|
|
—
|
|
|||||
Total collateral dependent impaired loans
|
$
|
21,545
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
21,545
|
|
|
$
|
804
|
|
Loans held for sale
|
$
|
77,727
|
|
|
$
|
—
|
|
|
$
|
77,727
|
|
|
$
|
—
|
|
|
$
|
(835
|
)
|
Other real estate owned
|
$
|
11,908
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,908
|
|
|
$
|
1,847
|
|
Premises, furniture and equipment held for sale
|
$
|
4,422
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,422
|
|
|
$
|
(74
|
)
|
|
Fair Value Measurements at
December 31, 2017
|
||||||||||||||||||
|
Total
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Year-to-
Date (Gains) Losses |
||||||||||
Collateral dependent impaired loans:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial
|
$
|
3,212
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,212
|
|
|
$
|
1,119
|
|
Commercial real estate
|
9,480
|
|
|
—
|
|
|
—
|
|
|
9,480
|
|
|
322
|
|
|||||
Agricultural and agricultural real estate
|
8,406
|
|
|
—
|
|
|
—
|
|
|
8,406
|
|
|
2,028
|
|
|||||
Residential real estate
|
1,137
|
|
|
—
|
|
|
—
|
|
|
1,137
|
|
|
—
|
|
|||||
Consumer
|
1,234
|
|
|
—
|
|
|
—
|
|
|
1,234
|
|
|
—
|
|
|||||
Total collateral dependent impaired loans
|
$
|
23,469
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
23,469
|
|
|
$
|
3,469
|
|
Loans held for sale
|
$
|
44,560
|
|
|
$
|
—
|
|
|
$
|
44,560
|
|
|
$
|
—
|
|
|
$
|
190
|
|
Other real estate owned
|
$
|
10,777
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,777
|
|
|
$
|
737
|
|
Premises, furniture and equipment held for sale
|
$
|
1,977
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,977
|
|
|
$
|
192
|
|
Commercial servicing rights
|
$
|
291
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
291
|
|
|
$
|
(21
|
)
|
|
For the Nine Months Ended
September 30, 2018 |
|
For the Year Ended
December 31, 2017
|
||||
Balance at January 1,
|
$
|
1,738
|
|
|
$
|
2,790
|
|
Acquired interest rate lock commitments
|
1,383
|
|
|
—
|
|
||
Total gains (losses) included in earnings
|
(1,849
|
)
|
|
(1,479
|
)
|
||
Issuances
|
1,661
|
|
|
1,875
|
|
||
Settlements
|
(1,394
|
)
|
|
(1,448
|
)
|
||
Balance at period end
|
$
|
1,539
|
|
|
$
|
1,738
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
In-scope of Topic 606
|
|
|
|
|
|
|
|
||||||||
Service charges and fees
|
|
|
|
|
|
|
|
||||||||
Service charges and fees on deposit accounts
|
$
|
2,858
|
|
|
$
|
2,577
|
|
|
$
|
8,270
|
|
|
$
|
7,002
|
|
Overdraft fees
|
2,990
|
|
|
2,479
|
|
|
7,716
|
|
|
6,950
|
|
||||
Customer service fees
|
101
|
|
|
102
|
|
|
266
|
|
|
217
|
|
||||
Credit card fee income
|
3,062
|
|
|
1,994
|
|
|
8,443
|
|
|
6,212
|
|
||||
Debit card income
|
3,883
|
|
|
2,985
|
|
|
10,349
|
|
|
8,908
|
|
||||
Other service charges
|
1
|
|
|
1
|
|
|
2
|
|
|
2
|
|
||||
Total service charges and fees
|
$
|
12,895
|
|
|
$
|
10,138
|
|
|
$
|
35,046
|
|
|
$
|
29,291
|
|
Trust fees
|
4,499
|
|
|
3,872
|
|
|
13,794
|
|
|
11,482
|
|
||||
Brokerage and insurance commissions
|
1,111
|
|
|
950
|
|
|
2,895
|
|
|
2,962
|
|
||||
Total noninterest income in-scope of Topic 606
|
$
|
18,505
|
|
|
$
|
14,960
|
|
|
$
|
51,735
|
|
|
$
|
43,735
|
|
|
|
|
|
|
|
|
|
||||||||
Out-of-scope of Topic 606
|
|
|
|
|
|
|
|
||||||||
Loan servicing income
|
$
|
1,670
|
|
|
$
|
1,161
|
|
|
$
|
5,231
|
|
|
$
|
4,236
|
|
Securities gains/(losses), net
|
(145
|
)
|
|
1,679
|
|
|
1,037
|
|
|
5,553
|
|
||||
Unrealized gain on equity securities, net
|
54
|
|
|
—
|
|
|
97
|
|
|
—
|
|
||||
Net gains on sale of loans held for sale
|
7,410
|
|
|
4,997
|
|
|
18,261
|
|
|
17,961
|
|
||||
Valuation adjustment on commercial servicing rights
|
230
|
|
|
5
|
|
|
12
|
|
|
29
|
|
||||
Income on bank owned life insurance
|
892
|
|
|
766
|
|
|
2,206
|
|
|
2,039
|
|
||||
Other noninterest income
|
1,149
|
|
|
1,409
|
|
|
3,536
|
|
|
2,941
|
|
||||
Total noninterest income out-of-scope of Topic 606
|
11,260
|
|
|
10,017
|
|
|
30,380
|
|
|
32,759
|
|
||||
Total noninterest income
|
$
|
29,765
|
|
|
$
|
24,977
|
|
|
$
|
82,115
|
|
|
$
|
76,494
|
|
•
|
On February 23, 2018, Heartland completed the acquisition of Signature Bancshares, Inc., parent company of Signature Bank, based in Minnetonka, Minnesota. Based on Heartland's closing common stock price of $53.55 per share as of February 23, 2018, the aggregate consideration was $61.4 million, with approximately 10% of the consideration paid in cash and 90% paid by delivery of Heartland common stock. Simultaneous with the closing of the transaction, Signature Bank merged into Heartland's Minnesota Bank & Trust subsidiary. As of the close date, Signature Bancshares, Inc. had, at fair value, total assets of $427.1 million, total loans of $324.5 million and total deposits of $357.3 million. The systems conversion for this transaction occurred on April 20, 2018.
|
•
|
On May 18, 2018, Heartland completed the acquisition of Lubbock, Texas based First Bank Lubbock Bancshares, Inc. ("FBLB"), parent company of First Bank & Trust, and PrimeWest Mortgage Corporation, which is a wholly-owned subsidiary of First Bank & Trust. Based on Heartland's closing common stock price of $55.05 per share on May 18, 2018, the aggregate consideration paid to FBLB common shareholders was $189.9 million, with approximately 3% of the consideration paid in cash and 97% paid by delivery of Heartland common stock. As a result of the transaction, First
|
(Dollars in thousands, except per share data)
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
STATEMENT OF INCOME DATA
|
|
|
|
|
|
|
|
||||||||
Interest income
|
$
|
124,894
|
|
|
$
|
98,978
|
|
|
$
|
339,517
|
|
|
$
|
261,590
|
|
Interest expense
|
14,216
|
|
|
9,134
|
|
|
35,846
|
|
|
24,138
|
|
||||
Net interest income
|
110,678
|
|
|
89,844
|
|
|
303,671
|
|
|
237,452
|
|
||||
Provision for loan losses
|
5,238
|
|
|
5,705
|
|
|
14,332
|
|
|
10,235
|
|
||||
Net interest income after provision for loan losses
|
105,440
|
|
|
84,139
|
|
|
289,339
|
|
|
227,217
|
|
||||
Noninterest income
|
29,765
|
|
|
24,977
|
|
|
82,115
|
|
|
76,494
|
|
||||
Noninterest expenses
|
92,539
|
|
|
78,759
|
|
|
265,067
|
|
|
219,797
|
|
||||
Income taxes
|
8,956
|
|
|
8,725
|
|
|
21,530
|
|
|
22,314
|
|
||||
Net income
|
33,710
|
|
|
21,632
|
|
|
84,857
|
|
|
61,600
|
|
||||
Preferred dividends
|
(13
|
)
|
|
(13
|
)
|
|
(39
|
)
|
|
(45
|
)
|
||||
Interest expense on convertible preferred debt
|
—
|
|
|
3
|
|
|
—
|
|
|
12
|
|
||||
Net income available to common stockholders
|
$
|
33,697
|
|
|
$
|
21,622
|
|
|
$
|
84,818
|
|
|
$
|
61,567
|
|
|
|
|
|
|
|
|
|
||||||||
Key Performance Ratios
|
|
|
|
|
|
|
|
||||||||
Annualized return on average assets
|
1.18
|
%
|
|
0.89
|
%
|
|
1.07
|
%
|
|
0.94
|
%
|
||||
Annualized return on average common equity (GAAP)
|
10.58
|
%
|
|
8.99
|
%
|
|
9.95
|
%
|
|
9.88
|
%
|
||||
Annualized return on average tangible common equity (non-GAAP)
(1)
|
16.30
|
%
|
|
12.41
|
%
|
|
14.71
|
%
|
|
12.90
|
%
|
||||
Annualized ratio of net charge-offs to average loans
|
0.28
|
%
|
|
0.31
|
%
|
|
0.17
|
%
|
|
0.23
|
%
|
||||
Annualized net interest margin (GAAP)
|
4.32
|
%
|
|
4.08
|
%
|
|
4.25
|
%
|
|
4.00
|
%
|
||||
Annualized net interest margin, fully tax-equivalent (non-GAAP)
(2)
|
4.38
|
%
|
|
4.26
|
%
|
|
4.32
|
%
|
|
4.19
|
%
|
||||
Efficiency ratio, fully tax-equivalent
(3)
|
62.40
|
%
|
|
64.54
|
%
|
|
65.03
|
%
|
|
66.58
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Reconciliation of Annualized Return on Average Tangible Common Equity (non-GAAP)
(4)
|
|
|
|
|
|
|
|
||||||||
Net income available to common shareholders (GAAP)
|
$
|
33,697
|
|
|
$
|
21,622
|
|
|
$
|
84,818
|
|
|
$
|
61,567
|
|
|
|
|
|
|
|
|
|
||||||||
Average common stockholders' equity (GAAP)
|
$
|
1,263,226
|
|
|
$
|
954,511
|
|
|
$
|
1,139,149
|
|
|
$
|
833,150
|
|
Less average goodwill
|
391,668
|
|
|
226,097
|
|
|
323,058
|
|
|
167,009
|
|
||||
Less average other intangibles, net
|
51,592
|
|
|
36,950
|
|
|
45,207
|
|
|
27,992
|
|
||||
Average tangible common equity (non-GAAP)
|
$
|
819,966
|
|
|
$
|
691,464
|
|
|
$
|
770,884
|
|
|
$
|
638,149
|
|
Annualized return on average common equity (GAAP)
|
10.58
|
%
|
|
8.99
|
%
|
|
9.95
|
%
|
|
9.88
|
%
|
||||
Annualized return on average tangible common equity (non-GAAP)
|
16.30
|
%
|
|
12.41
|
%
|
|
14.71
|
%
|
|
12.90
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Reconciliation of Annualized Net Interest Margin, Fully Tax-Equivalent (non-GAAP)
(5)
|
|
|
|
|
|
|
|
||||||||
Net Interest Income (GAAP)
|
$
|
110,678
|
|
|
$
|
89,844
|
|
|
$
|
303,671
|
|
|
$
|
237,452
|
|
Plus tax-equivalent adjustment
(6)
|
1,544
|
|
|
3,925
|
|
|
4,663
|
|
|
11,581
|
|
||||
Net interest income - tax-equivalent (non-GAAP)
|
$
|
112,222
|
|
|
$
|
93,769
|
|
|
$
|
308,334
|
|
|
$
|
249,033
|
|
|
|
|
|
|
|
|
|
||||||||
Average earning assets
|
$
|
10,154,591
|
|
|
$
|
8,726,228
|
|
|
$
|
9,547,147
|
|
|
$
|
7,942,810
|
|
Net interest margin (GAAP)
|
4.32
|
%
|
|
4.08
|
%
|
|
4.25
|
%
|
|
4.00
|
%
|
||||
Net interest margin, fully tax-equivalent (non-GAAP)
|
4.38
|
%
|
|
4.26
|
%
|
|
4.32
|
%
|
|
4.19
|
%
|
||||
|
|
|
|
|
|
|
|
(Dollars in thousands, except per share data)
|
As Of and For the Quarter Ended
|
||||||||||||||||||
|
9/30/2018
|
|
6/30/2018
|
|
3/31/2018
|
|
12/31/2017
|
|
9/30/2017
|
||||||||||
BALANCE SHEET DATA
|
|
|
|
|
|
|
|
|
|
||||||||||
Investments
|
$
|
2,540,779
|
|
|
$
|
2,468,113
|
|
|
$
|
2,300,413
|
|
|
$
|
2,492,866
|
|
|
$
|
2,372,916
|
|
Loans held for sale
|
77,727
|
|
|
55,684
|
|
|
24,376
|
|
|
44,560
|
|
|
35,795
|
|
|||||
Total loans receivable
(1)
|
7,365,493
|
|
|
7,477,697
|
|
|
6,746,015
|
|
|
6,391,464
|
|
|
6,373,415
|
|
|||||
Allowance for loan losses
|
61,221
|
|
|
61,324
|
|
|
58,656
|
|
|
55,686
|
|
|
54,885
|
|
|||||
Total assets
|
11,335,132
|
|
|
11,301,920
|
|
|
10,055,863
|
|
|
9,810,739
|
|
|
9,755,627
|
|
|||||
Total deposits
(2)
|
9,512,163
|
|
|
9,489,144
|
|
|
8,541,540
|
|
|
8,146,909
|
|
|
8,231,884
|
|
|||||
Long-term obligations
|
277,563
|
|
|
258,708
|
|
|
276,118
|
|
|
285,011
|
|
|
301,473
|
|
|||||
Preferred equity
|
—
|
|
|
938
|
|
|
938
|
|
|
938
|
|
|
938
|
|
|||||
Common stockholders’ equity
|
1,280,393
|
|
|
1,254,809
|
|
|
1,050,567
|
|
|
990,519
|
|
|
980,746
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Common Share Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Book value per common share (GAAP)
|
$
|
37.14
|
|
|
$
|
36.44
|
|
|
$
|
33.81
|
|
|
$
|
33.07
|
|
|
$
|
32.75
|
|
Tangible book value per common share (non-GAAP)
(3)
|
$
|
24.33
|
|
|
$
|
23.53
|
|
|
$
|
23.79
|
|
|
$
|
23.99
|
|
|
$
|
23.61
|
|
Common shares outstanding, net of treasury stock
|
34,473,029
|
|
|
34,438,445
|
|
|
31,068,239
|
|
|
29,953,356
|
|
|
29,946,069
|
|
|||||
Tangible common equity ratio (non-GAAP)
(4)
|
7.70
|
%
|
|
7.46
|
%
|
|
7.59
|
%
|
|
7.53
|
%
|
|
7.46
|
%
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Reconciliation of Tangible Book Value Per Common Share (non-GAAP)
(5)
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stockholders' equity (GAAP)
|
$
|
1,280,393
|
|
|
$
|
1,254,809
|
|
|
$
|
1,050,567
|
|
|
$
|
990,518
|
|
|
$
|
980,746
|
|
Less goodwill
|
391,668
|
|
|
391,668
|
|
|
270,305
|
|
|
236,615
|
|
|
236,615
|
|
|||||
Less core deposit intangibles and customer relationship
intangibles, net |
50,071
|
|
|
52,698
|
|
|
41,063
|
|
|
35,203
|
|
|
37,028
|
|
|||||
Tangible common stockholders' equity (non-GAAP)
|
$
|
838,654
|
|
|
$
|
810,443
|
|
|
$
|
739,199
|
|
|
$
|
718,700
|
|
|
$
|
707,103
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Common shares outstanding, net of treasury stock
|
34,473,029
|
|
|
34,438,445
|
|
|
31,068,239
|
|
|
29,953,356
|
|
|
29,946,069
|
|
|||||
Common stockholders' equity (book value) per share (GAAP)
|
$
|
37.14
|
|
|
$
|
36.44
|
|
|
$
|
33.81
|
|
|
$
|
33.07
|
|
|
$
|
32.75
|
|
Tangible book value per common share (non-GAAP)
|
$
|
24.33
|
|
|
$
|
23.53
|
|
|
$
|
23.79
|
|
|
$
|
23.99
|
|
|
$
|
23.61
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Reconciliation of Tangible Common Equity Ratio (non-GAAP)
(6)
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets (GAAP)
|
$
|
11,335,132
|
|
|
$
|
11,301,920
|
|
|
$
|
10,055,863
|
|
|
$
|
9,810,739
|
|
|
$
|
9,755,627
|
|
Less goodwill
|
391,668
|
|
|
391,668
|
|
|
270,305
|
|
|
236,615
|
|
|
236,615
|
|
|||||
Less core deposit intangibles and customer relationship
intangibles, net |
50,071
|
|
|
52,698
|
|
|
41,063
|
|
|
35,203
|
|
|
37,028
|
|
|||||
Total tangible assets (non-GAAP)
|
$
|
10,893,393
|
|
|
$
|
10,857,554
|
|
|
$
|
9,744,495
|
|
|
$
|
9,538,921
|
|
|
$
|
9,481,984
|
|
Tangible common equity ratio (non-GAAP)
|
7.70
|
%
|
|
7.46
|
%
|
|
7.59
|
%
|
|
7.53
|
%
|
|
7.46
|
%
|
|||||
|
|||||||||||||||||||
(1) Excludes loans held for sale.
|
|||||||||||||||||||
(2) Excludes deposits held for sale.
|
|||||||||||||||||||
(3) Refer to the "Reconciliation of Tangible Book Value Per Common Share (non-GAAP)" table.
|
|||||||||||||||||||
(4) Refer to the "Reconciliation of Tangible Common Equity Ratio (non-GAAP)" table.
|
|||||||||||||||||||
(5) Tangible book value per common share is total common stockholders' equity less goodwill and core deposit and customer relationship intangibles, net, divided by common shares outstanding, net of treasury. This amount is a non-GAAP financial measure but has been included as it is considered to be a critical metric with which to analyze and evaluate the financial condition and capital strength of Heartland. This measure should not be considered a substitute for operating results determined in accordance with GAAP.
|
|||||||||||||||||||
(6) The tangible common equity ratio is total common stockholders' equity less goodwill and core deposit intangibles, net divided by total assets less goodwill and core deposit intangibles, net. This ratio is a non-GAAP financial measure but has been included as it is considered to be a critical metric with which to analyze and evaluate the financial condition and capital strength of Heartland. This measure should not be considered a substitute for operating results determined in accordance with GAAP.
|
|
Three Months Ended
September 30, |
|
|
|||||||||||
|
2018
|
|
2017
|
|
Change
|
|
% Change
|
|||||||
Service charges and fees
|
$
|
12,895
|
|
|
$
|
10,138
|
|
|
$
|
2,757
|
|
|
27
|
%
|
Loan servicing income
|
1,670
|
|
|
1,161
|
|
|
509
|
|
|
44
|
|
|||
Trust fees
|
4,499
|
|
|
3,872
|
|
|
627
|
|
|
16
|
|
|||
Brokerage and insurance commissions
|
1,111
|
|
|
950
|
|
|
161
|
|
|
17
|
|
|||
Securities gains/(losses), net
|
(145
|
)
|
|
1,679
|
|
|
(1,824
|
)
|
|
(109
|
)
|
|||
Unrealized gain on equity securities, net
|
54
|
|
|
—
|
|
|
54
|
|
|
100
|
|
|||
Net gains on sale of loans held for sale
|
7,410
|
|
|
4,997
|
|
|
2,413
|
|
|
48
|
|
|||
Valuation adjustment on servicing rights
|
230
|
|
|
5
|
|
|
225
|
|
|
4,500
|
|
|||
Income on bank owned life insurance
|
892
|
|
|
766
|
|
|
126
|
|
|
16
|
|
|||
Other noninterest income
|
1,149
|
|
|
1,409
|
|
|
(260
|
)
|
|
(18
|
)
|
|||
Total noninterest income
|
$
|
29,765
|
|
|
$
|
24,977
|
|
|
$
|
4,788
|
|
|
19
|
%
|
|
Nine Months Ended
September 30, |
|
|
|||||||||||
|
2018
|
|
2017
|
|
Change
|
|
% Change
|
|||||||
Service charges and fees
|
$
|
35,046
|
|
|
$
|
29,291
|
|
|
$
|
5,755
|
|
|
20
|
%
|
Loan servicing income
|
5,231
|
|
|
4,236
|
|
|
995
|
|
|
23
|
|
|||
Trust fees
|
13,794
|
|
|
11,482
|
|
|
2,312
|
|
|
20
|
|
|||
Brokerage and insurance commissions
|
2,895
|
|
|
2,962
|
|
|
(67
|
)
|
|
(2
|
)
|
|||
Securities gains/(losses), net
|
1,037
|
|
|
5,553
|
|
|
(4,516
|
)
|
|
(81
|
)
|
|||
Unrealized gain on equity securities, net
|
97
|
|
|
—
|
|
|
97
|
|
|
100
|
|
|||
Net gains on sale of loans held for sale
|
18,261
|
|
|
17,961
|
|
|
300
|
|
|
2
|
|
|||
Valuation adjustment on servicing rights
|
12
|
|
|
29
|
|
|
(17
|
)
|
|
(59
|
)
|
|||
Income on bank owned life insurance
|
2,206
|
|
|
2,039
|
|
|
167
|
|
|
8
|
|
|||
Other noninterest income
|
3,536
|
|
|
2,941
|
|
|
595
|
|
|
20
|
|
|||
Total noninterest income
|
$
|
82,115
|
|
|
$
|
76,494
|
|
|
$
|
5,621
|
|
|
7
|
%
|
|
Three Months Ended
September 30, |
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
Change
|
|
% Change
|
|||||||
Service charges and fees on deposit accounts
|
$
|
2,858
|
|
|
$
|
2,577
|
|
|
$
|
281
|
|
|
11
|
%
|
Overdraft fees
|
2,990
|
|
|
2,479
|
|
|
511
|
|
|
21
|
|
|||
Customer service fees
|
101
|
|
|
102
|
|
|
(1
|
)
|
|
(1
|
)
|
|||
Credit card fee income
|
3,062
|
|
|
1,994
|
|
|
1,068
|
|
|
54
|
|
|||
Debit card income
|
3,883
|
|
|
2,985
|
|
|
898
|
|
|
30
|
|
|||
Other service charges
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|||
Total service charges and fees
|
$
|
12,895
|
|
|
$
|
10,138
|
|
|
$
|
2,757
|
|
|
27
|
%
|
|
|
|
|
|
|
|
|
|||||||
|
Nine Months Ended
September 30, |
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
Change
|
|
% Change
|
|||||||
Service charges and fees on deposit accounts
|
$
|
8,270
|
|
|
$
|
7,002
|
|
|
$
|
1,268
|
|
|
18
|
%
|
Overdraft fees
|
7,716
|
|
|
6,950
|
|
|
766
|
|
|
11
|
|
|||
Customer service fees
|
266
|
|
|
217
|
|
|
49
|
|
|
23
|
|
|||
Credit card fee income
|
8,443
|
|
|
6,212
|
|
|
2,231
|
|
|
36
|
|
|||
Debit card income
|
10,349
|
|
|
8,908
|
|
|
1,441
|
|
|
16
|
|
|||
Other service charges
|
2
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|||
Total service charges and fees
|
$
|
35,046
|
|
|
$
|
29,291
|
|
|
$
|
5,755
|
|
|
20
|
%
|
|
Three Months Ended
September 30, |
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
Change
|
|
% Change
|
|||||||
Commercial and agricultural loan servicing fees
(1)
|
$
|
702
|
|
|
$
|
684
|
|
|
$
|
18
|
|
|
3
|
%
|
Residential mortgage servicing fees
|
2,610
|
|
|
2,932
|
|
|
(322
|
)
|
|
(11
|
)
|
|||
Mortgage servicing rights amortization
|
(1,642
|
)
|
|
(2,455
|
)
|
|
813
|
|
|
33
|
|
|||
Total loan servicing income
|
$
|
1,670
|
|
|
$
|
1,161
|
|
|
$
|
509
|
|
|
44
|
%
|
|
||||||||||||||
|
Nine Months Ended
September 30, |
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
Change
|
|
% Change
|
|||||||
Commercial and agricultural loan servicing fees
(1)
|
$
|
2,375
|
|
|
$
|
2,101
|
|
|
$
|
274
|
|
|
13
|
%
|
Residential mortgage servicing fees
|
7,250
|
|
|
9,319
|
|
|
(2,069
|
)
|
|
(22
|
)
|
|||
Mortgage servicing rights amortization
|
(4,394
|
)
|
|
(7,184
|
)
|
|
2,790
|
|
|
39
|
|
|||
Total loan servicing income
|
$
|
5,231
|
|
|
$
|
4,236
|
|
|
$
|
995
|
|
|
23
|
%
|
|
|
|
|
|
|
|
|
|||||||
(1) Includes servicing fees for commercial, commercial real estate, agricultural and agricultural real estate loans.
|
|
Three Months Ended
September 30, |
|
|
|||||||||||
|
2018
|
|
2017
|
|
Change
|
|
% Change
|
|||||||
Salaries and employee benefits
|
$
|
49,921
|
|
|
$
|
45,225
|
|
|
$
|
4,696
|
|
|
10
|
%
|
Occupancy
|
6,348
|
|
|
6,223
|
|
|
125
|
|
|
2
|
|
|||
Furniture and equipment
|
3,470
|
|
|
2,826
|
|
|
644
|
|
|
23
|
|
|||
Professional fees
|
11,681
|
|
|
8,450
|
|
|
3,231
|
|
|
38
|
|
|||
FDIC insurance assessments
|
1,119
|
|
|
894
|
|
|
225
|
|
|
25
|
|
|||
Advertising
|
2,754
|
|
|
1,358
|
|
|
1,396
|
|
|
103
|
|
|||
Core deposit intangibles and customer relationship intangibles amortization
|
2,626
|
|
|
1,863
|
|
|
763
|
|
|
41
|
|
|||
Other real estate and loan collection expenses
|
784
|
|
|
581
|
|
|
203
|
|
|
35
|
|
|||
(Gain)/loss on sales/valuations of assets, net
|
912
|
|
|
1,342
|
|
|
(430
|
)
|
|
(32
|
)
|
|||
Restructuring expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Other noninterest expenses
|
12,924
|
|
|
9,997
|
|
|
2,927
|
|
|
29
|
|
|||
Total noninterest expenses
|
$
|
92,539
|
|
|
$
|
78,759
|
|
|
$
|
13,780
|
|
|
17
|
%
|
|
Nine Months Ended
September 30, |
|
|
|||||||||||
|
2018
|
|
2017
|
|
Change
|
|
% Change
|
|||||||
Salaries and employee benefits
|
$
|
149,389
|
|
|
$
|
128,118
|
|
|
$
|
21,271
|
|
|
17
|
%
|
Occupancy
|
18,706
|
|
|
16,352
|
|
|
2,354
|
|
|
14
|
|
|||
Furniture and equipment
|
9,403
|
|
|
7,913
|
|
|
1,490
|
|
|
19
|
|
|||
Professional fees
|
30,088
|
|
|
24,342
|
|
|
5,746
|
|
|
24
|
|
|||
FDIC insurance assessments
|
2,792
|
|
|
2,610
|
|
|
182
|
|
|
7
|
|
|||
Advertising
|
6,839
|
|
|
5,141
|
|
|
1,698
|
|
|
33
|
|
|||
Core deposit intangibles and customer relationship intangibles amortization
|
6,763
|
|
|
4,252
|
|
|
2,511
|
|
|
59
|
|
|||
Other real estate and loan collection expenses
|
2,464
|
|
|
1,774
|
|
|
690
|
|
|
39
|
|
|||
(Gain)/loss on sales/valuations of assets, net
|
2,243
|
|
|
1,642
|
|
|
601
|
|
|
37
|
|
|||
Restructuring expenses
|
2,564
|
|
|
—
|
|
|
2,564
|
|
|
100
|
|
|||
Other noninterest expenses
|
33,816
|
|
|
27,653
|
|
|
6,163
|
|
|
22
|
|
|||
Total noninterest expenses
|
$
|
265,067
|
|
|
$
|
219,797
|
|
|
$
|
45,270
|
|
|
21
|
%
|
LOAN PORTFOLIO
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
||||||
Loans receivable held to maturity:
|
|
|
|
|
|
|
|
||||||
Commercial
|
$
|
1,962,222
|
|
|
26.63
|
%
|
|
$
|
1,646,606
|
|
|
25.76
|
%
|
Commercial real estate
|
3,648,731
|
|
|
49.52
|
|
|
3,163,269
|
|
|
49.48
|
|
||
Agricultural and agricultural real estate
|
574,048
|
|
|
7.79
|
|
|
511,588
|
|
|
8.00
|
|
||
Residential mortgage
|
676,941
|
|
|
9.19
|
|
|
624,279
|
|
|
9.76
|
|
||
Consumer
|
506,181
|
|
|
6.87
|
|
|
447,484
|
|
|
7.00
|
|
||
Gross loans receivable held to maturity
|
7,368,123
|
|
|
100.00
|
%
|
|
6,393,226
|
|
|
100.00
|
%
|
||
Unearned discount
|
(1,340
|
)
|
|
|
|
(556
|
)
|
|
|
||||
Deferred loan fees
|
(1,290
|
)
|
|
|
|
(1,206
|
)
|
|
|
||||
Total net loans receivable held to maturity
|
7,365,493
|
|
|
|
|
6,391,464
|
|
|
|
||||
Allowance for loan losses
|
(61,221
|
)
|
|
|
|
(55,686
|
)
|
|
|
||||
Loans receivable, net
|
$
|
7,304,272
|
|
|
|
|
$
|
6,335,778
|
|
|
|
|
LOANS SECURED BY REAL ESTATE
|
|||||||
|
September 30, 2018
|
|
December 31, 2017
|
||||
Residential real estate, excluding residential construction and residential lot loans
|
$
|
1,152,337
|
|
|
$
|
1,080,066
|
|
Industrial, manufacturing, business and commercial
|
815,835
|
|
|
935,614
|
|
||
Agriculture
|
275,028
|
|
|
256,452
|
|
||
Retail
|
427,970
|
|
|
348,749
|
|
||
Office
|
485,972
|
|
|
356,782
|
|
||
Land development and lots
|
212,465
|
|
|
162,273
|
|
||
Hotel, resort and hospitality
|
231,314
|
|
|
167,396
|
|
||
Multi-family
|
268,462
|
|
|
211,862
|
|
||
Food and beverage
|
132,017
|
|
|
108,977
|
|
||
Warehousing
|
183,232
|
|
|
125,372
|
|
||
Health services
|
172,906
|
|
|
155,529
|
|
||
Residential construction
|
184,057
|
|
|
134,848
|
|
||
All other
|
230,814
|
|
|
187,508
|
|
||
Total loans secured by real estate
|
$
|
4,772,409
|
|
|
$
|
4,231,428
|
|
ANALYSIS OF ALLOWANCE FOR LOAN LOSSES
|
Three Months Ended
September 30, |
||||||
|
2018
|
|
2017
|
||||
Balance at beginning of period
|
$
|
61,324
|
|
|
$
|
54,051
|
|
Provision for loan losses
|
5,238
|
|
|
5,705
|
|
||
Recoveries on loans previously charged off
|
779
|
|
|
888
|
|
||
Charge-offs on loans
|
(6,120
|
)
|
|
(5,759
|
)
|
||
Balance at end of period
|
$
|
61,221
|
|
|
$
|
54,885
|
|
Annualized ratio of net charge offs to average loans
|
0.28
|
%
|
|
0.31
|
%
|
||
|
|
|
|
||||
|
Nine Months Ended
September 30, |
||||||
|
2018
|
|
2017
|
||||
Balance at beginning of period
|
$
|
55,686
|
|
|
$
|
54,324
|
|
Provision for loan losses
|
14,332
|
|
|
10,235
|
|
||
Recoveries on loans previously charged off
|
2,711
|
|
|
2,569
|
|
||
Charge-offs on loans
|
(11,508
|
)
|
|
(12,243
|
)
|
||
Balance at end of period
|
$
|
61,221
|
|
|
$
|
54,885
|
|
Annualized ratio of net charge offs to average loans
|
0.17
|
%
|
|
0.23
|
%
|
|
Nonperforming
Loans
|
|
Other
Real Estate
Owned
|
|
Other
Repossessed
Assets
|
|
Total
Nonperforming
Assets
|
||||||||
June 30, 2018
|
$
|
69,430
|
|
|
$
|
11,074
|
|
|
$
|
499
|
|
|
$
|
81,003
|
|
Loan foreclosures
|
(2,755
|
)
|
|
2,752
|
|
|
3
|
|
|
—
|
|
||||
Net loan charge-offs
|
(5,341
|
)
|
|
—
|
|
|
—
|
|
|
(5,341
|
)
|
||||
Acquired nonperforming assets
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
New nonperforming loans
|
16,965
|
|
|
—
|
|
|
—
|
|
|
16,965
|
|
||||
Reduction of nonperforming loans
(1)
|
(5,085
|
)
|
|
—
|
|
|
—
|
|
|
(5,085
|
)
|
||||
OREO/Repossessed assets sales proceeds
|
—
|
|
|
(1,063
|
)
|
|
(1
|
)
|
|
(1,064
|
)
|
||||
OREO/Repossessed assets writedowns, net
|
—
|
|
|
(855
|
)
|
|
(31
|
)
|
|
(886
|
)
|
||||
Net activity at Citizens Finance Co.
|
—
|
|
|
—
|
|
|
25
|
|
|
25
|
|
||||
September 30, 2018
|
$
|
73,214
|
|
|
$
|
11,908
|
|
|
$
|
495
|
|
|
$
|
85,617
|
|
|
Nonperforming
Loans
|
|
Other
Real Estate
Owned
|
|
Other
Repossessed
Assets
|
|
Total
Nonperforming
Assets
|
||||||||
December 31, 2017
|
$
|
63,411
|
|
|
$
|
10,777
|
|
|
$
|
411
|
|
|
$
|
74,599
|
|
Loan foreclosures
|
(5,081
|
)
|
|
5,016
|
|
|
65
|
|
|
—
|
|
||||
Net loan charge-offs
|
(8,797
|
)
|
|
—
|
|
|
—
|
|
|
(8,797
|
)
|
||||
Acquired nonperforming assets
|
9,246
|
|
|
1,186
|
|
|
—
|
|
|
10,432
|
|
||||
New nonperforming loans
|
41,765
|
|
|
—
|
|
|
—
|
|
|
41,765
|
|
||||
Reduction of nonperforming loans
(1)
|
(27,330
|
)
|
|
—
|
|
|
—
|
|
|
(27,330
|
)
|
||||
OREO/Repossessed assets sales proceeds
|
—
|
|
|
(3,225
|
)
|
|
(37
|
)
|
|
(3,262
|
)
|
||||
OREO/Repossessed assets writedowns, net
|
—
|
|
|
(1,846
|
)
|
|
(49
|
)
|
|
(1,895
|
)
|
||||
Net activity at Citizens Finance Co.
|
—
|
|
|
—
|
|
|
105
|
|
|
105
|
|
||||
September 30, 2018
|
$
|
73,214
|
|
|
$
|
11,908
|
|
|
$
|
495
|
|
|
$
|
85,617
|
|
|
|
|
|
|
|
|
|
||||||||
(1) Includes principal reductions and transfers to performing status.
|
SECURITIES PORTFOLIO COMPOSITION
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
||||||
U.S. government corporations and agencies
|
$
|
26,997
|
|
|
1.06
|
%
|
|
$
|
5,328
|
|
|
0.21
|
%
|
Mortgage and asset-backed securities
|
1,871,819
|
|
|
73.67
|
|
|
1,753,736
|
|
|
70.35
|
|
||
Obligation of states and political subdivisions
|
598,391
|
|
|
23.55
|
|
|
694,565
|
|
|
27.86
|
|
||
Equity securities
|
16,916
|
|
|
0.67
|
|
|
16,674
|
|
|
0.67
|
|
||
Other securities
|
26,656
|
|
|
1.05
|
|
|
22,563
|
|
|
0.91
|
|
||
Total securities
|
$
|
2,540,779
|
|
|
100.00
|
%
|
|
$
|
2,492,866
|
|
|
100.00
|
%
|
DEPOSITS
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
||||||
Demand
|
$
|
3,427,819
|
|
|
36.04
|
%
|
|
$
|
2,983,128
|
|
|
36.62
|
%
|
Savings
|
4,958,430
|
|
|
52.12
|
|
|
4,240,328
|
|
|
52.05
|
|
||
Time
|
1,125,914
|
|
|
11.84
|
|
|
923,453
|
|
|
11.33
|
|
||
Total
|
$
|
9,512,163
|
|
|
100.00
|
%
|
|
$
|
8,146,909
|
|
|
100.00
|
%
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Securities sold under agreement to repurchase
|
$
|
88,606
|
|
|
$
|
107,957
|
|
Federal funds purchased
|
3,900
|
|
|
168,250
|
|
||
Advances from the FHLB
|
30,000
|
|
|
40,000
|
|
||
Other short-term borrowings
|
8,633
|
|
|
8,484
|
|
||
Total
|
$
|
131,139
|
|
|
$
|
324,691
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Advances from the FHLB
|
$
|
3,523
|
|
|
$
|
6,702
|
|
Wholesale repurchase agreements
|
—
|
|
|
30,000
|
|
||
Trust preferred securities
|
130,722
|
|
|
121,886
|
|
||
Senior notes
|
6,000
|
|
|
11,000
|
|
||
Note payable to unaffiliated bank
|
60,167
|
|
|
33,667
|
|
||
Contracts payable for purchase of real estate and other assets
|
1,964
|
|
|
1,881
|
|
||
Subordinated notes
|
74,107
|
|
|
74,000
|
|
||
Other borrowings
|
1,080
|
|
|
5,875
|
|
||
Total
|
$
|
277,563
|
|
|
$
|
285,011
|
|
|
Total
Capital
(to Risk-
Weighted
Assets)
|
|
Tier 1
Capital
(to Risk-
Weighted
Assets)
|
|
Common
Equity
Tier 1
(to Risk-
Weighted
Assets)
|
|
Tier 1
Capital
(to Average Assets)
|
||||||||
September 30, 2018
|
13.59
|
%
|
|
12.02
|
%
|
|
10.50
|
%
|
|
9.53
|
%
|
||||
Minimum capital requirement
|
8.00
|
%
|
|
6.00
|
%
|
|
4.50
|
%
|
|
4.00
|
%
|
||||
Well capitalized requirement
|
10.00
|
%
|
|
8.00
|
%
|
|
6.50
|
%
|
|
5.00
|
%
|
||||
Minimum capital requirement, including fully-phased in capital conservation buffer (2019)
|
10.50
|
%
|
|
8.50
|
%
|
|
7.00
|
%
|
|
N/A
|
|
||||
Risk-weighted assets
|
$
|
8,615,005
|
|
|
$
|
8,615,005
|
|
|
$
|
8,615,005
|
|
|
N/A
|
|
|
Average Assets
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
$
|
10,863,820
|
|
|||
|
|
|
|
|
|
|
|
||||||||
December 31, 2017
|
13.45
|
%
|
|
11.70
|
%
|
|
10.07
|
%
|
|
9.20
|
%
|
||||
Minimum capital requirement
|
8.00
|
%
|
|
6.00
|
%
|
|
4.50
|
%
|
|
4.00
|
%
|
||||
Well capitalized requirement
|
10.00
|
%
|
|
8.00
|
%
|
|
6.50
|
%
|
|
5.00
|
%
|
||||
Minimum capital requirement, including fully-phased in capital conservation buffer (2019)
|
10.50
|
%
|
|
8.50
|
%
|
|
7.00
|
%
|
|
N/A
|
|
||||
Risk-weighted assets
|
$
|
7,511,544
|
|
|
$
|
7,511,544
|
|
|
$
|
7,511,544
|
|
|
N/A
|
|
|
Average Assets
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
$
|
9,552,227
|
|
|
2018
|
|
2017
|
||||||||||
|
Net Interest
Margin
|
|
% Change
From Base
|
|
Net Interest
Margin
|
|
% Change
From Base
|
||||||
Year 1
|
|
|
|
|
|
|
|
||||||
Down 100 Basis Points
|
$
|
442,187
|
|
|
(3.07
|
)%
|
|
$
|
343,033
|
|
|
(2.69
|
)%
|
Base
|
$
|
456,192
|
|
|
|
|
$
|
352,502
|
|
|
|
||
Up 200 Basis Points
|
$
|
454,513
|
|
|
(0.37
|
)%
|
|
$
|
351,265
|
|
|
(0.35
|
)%
|
Year 2
|
|
|
|
|
|
|
|
|
|||||
Down 100 Basis Points
|
$
|
423,766
|
|
|
(7.11
|
)%
|
|
$
|
326,965
|
|
|
(7.24
|
)%
|
Base
|
$
|
463,765
|
|
|
1.66
|
%
|
|
$
|
354,238
|
|
|
0.49
|
%
|
Up 200 Basis Points
|
$
|
474,816
|
|
|
4.08
|
%
|
|
$
|
369,712
|
|
|
4.88
|
%
|
(1)
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101
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Financial statement formatted in Extensible Business Reporting Language: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Changes in Equity, and (vi) the Notes to Consolidated Financial Statements.
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HEARTLAND FINANCIAL USA, INC.
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(Registrant)
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/s/ Bruce K. Lee
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By: Bruce K. Lee
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President and Chief Executive Officer
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(Principal Executive Officer and Duly Authorized Officer)
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/s/ Bryan R. McKeag
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By: Bryan R. McKeag
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Executive Vice President and Chief Financial Officer
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(Principal Financial Officer and Duly Authorized Officer)
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/s/ Janet M. Quick
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By: Janet M. Quick
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Executive Vice President and Deputy Chief Financial Officer
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(Principal Accounting Officer and Duly Authorized Officer)
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Dated: November 6, 2018
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The number of directors constituting the entire board of directors shall not be less than three nor more than eleven as fixed from time to time by resolution of not less than 66 2/3% of the number of directors which immediately prior to such proposed change had been fixed, in the manner prescribed herein, by the board of directors of the corporation, provided, however, that the number of directors shall not be reduced as to shorten the term of any director at the time in office.
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No person shall be eligible for election to the board of directors if such person has attained the age of seventy-two (72) years prior to the date of the stockholders’ meeting at which directors are to be elected. Directors need not be stockholders of the corporation.
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/s/ Angela M. Kelley
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Angela M. Kelley
Senior Vice President and Secretary
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1.
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I have reviewed this quarterly report on Form 10-Q of Heartland Financial USA, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting, and;
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5.
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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Date:
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November 6, 2018
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/s/ Bruce K. Lee
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Bruce K. Lee
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President and Chief Executive Officer
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1.
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I have reviewed this quarterly report on Form 10-Q of Heartland Financial USA, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting, and;
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5.
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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Date:
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November 6, 2018
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/s/ Bryan R. McKeag
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Bryan R. McKeag
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Executive Vice President
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Chief Financial Officer
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/s/ Bruce K. Lee
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Bruce K. Lee
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President and Chief Executive Officer
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Date:
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November 6, 2018
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/s/ Bryan R. McKeag
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Bryan R. McKeag
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Executive Vice President
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Chief Financial Officer
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Date:
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November 6, 2018
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